Revisiting the Impact of Environmental Regulation on Green Total Factor Productivity in China: Based on a Comprehensive Index of Environmental Regulation from a Spatiotemporal Heterogeneity Perspective.

Abstract

Promoting greener and sustainable development is one of the main goals of the most recent 14th Five-Year Plan (i.e., 2021-2025). Environmental regulation is seen as fundamental to green transformation and an important way for all of China to reach a high-quality and sustainable development mode. However, large spatial disparities exist across the different regions in China, so formulating region-oriented environmental regulatory policies to achieve regional high-quality and sustainable development is now a matter of great practical significance. In the present paper, we analyze this problem and begin by calculating the high development level measured through the Green Total Factor Productivity (GTFP) of 259 Chinese cities. Thereafter we construct a comprehensive index of environmental regulation through the linear weighted-sum method. Lastly, we investigate the spatiotemporal heterogeneity of the impact of environmental regulation on GTFP using a Geographically and Temporally Weighted Regression (GTWR) model. We find that: (1) From the spatial dimension perspective, the impact of environmental regulation of Chinese cities on GTFP is either linear (monotonically increasing or decreasing), non-linear (U-shaped or inverted U-shaped), or nonsignificant. Most cities have a U-shaped relationship, indicating that environmental regulation first inhibits GTFP at the early stage, but then promotes it. There are also significant differences among cities in the turning points of environmental regulation; (2) From the time dimension perspective, the number of cities is on the rise having monotonically decreasing impacts of environmental regulation on GTFP. Furthermore, even for the same city, the relationship between the two variables shows different characteristics in different years; (3) The impact of five control variables on GTFP may also vary from one city to another over the sample period, also presenting spatiotemporal heterogeneity effects. Consequently, the formulation and implementation of environmental regulatory policies should not only adapt to local conditions but also choose reasonable and effective measures to achieve high-quality development targets.