The Mechanism of the Impact of Export Trade on Environmental Pollution: A Study from a Heterogeneous Perspective on Environmental Regulation from China

Abstract

The majority of the literature currently in existence on trade and pollution has concentrated on the analysis of both factors’ combined effects, and only a few studies have used heterogeneous environmental regulation as a starting point to investigate the underlying mechanisms of the impact of export trade on environmental pollution at the indirect level. We construct a mediating and moderating effect model using panel data from 30 provinces in China from 2002 to 2019 to investigate the mechanism of the effect of export trade on environmental pollution. Export trade produces large indirect inhibitory effects on environmental pollution only through market incentive-based restrictions, whereas the mediation impacts of government administrative and public monitoring laws are not significant. By interacting with elements such as technical innovation and energy structure, export trade can also negatively regulate its bad consequences on environmental degradation. According to the heterogeneity analysis’s findings, processing trade indirectly reduces pollution emissions by changing administrative rules and cutting emission costs, but general trade indirectly increases environmental pollution by favorably impacting market-based incentives regulations. The moderating effects of improving energy structures, industrial structure optimization, and R&D competition effects diminish the positive aggravating effect of general trade on pollution emissions, while processing trade has the opposite effect. The only means of controlling the harmful impact of processing trade on environmental degradation is through interaction with technical progress.