The effect of the pilot free trade zone policy on carbon emissions: evidence from China.

Abstract

The pilot free trade zone (PFTZ) policy is an important strategic initiative to lead green and high-quality economic development. Based on panel data from 2012 to 2019 of 287 Chinese cities, this study systematically investigates the effect of the PFTZ policy on carbon emissions by building the staggered difference-in-difference (DID) model. The results showed that the PFTZ policy significantly reduced carbon emissions and that this reduction effect increased over time. These findings hold true after robustness tests. Additionally, the heterogeneity analysis showed that the carbon emission reduction effect was more significant in coastal areas. In terms of impact mechanisms, the main driving force of carbon emission reduction from the PFTZ policy is technological progress. Furthermore, the PFTZ policy has a spatial spillover effect, which can drive neighboring cities to reduce their carbon emissions. This study provides useful policy insights for building a green low-carbon trade system and helps achieve carbon peaking and carbon neutrality goals.