Analysis of Coordinated Development of Energy and Environment in China’s Manufacturing Industry under Environmental Regulation: A Comparative Study of Sub-Industries

Abstract

In order to explore the impact of environmental regulation on the coordinated development of energy and the environment with the background of governance transition, we propose a three-stage integrated approach and use the panel data of China’s manufacturing industry 27 sub-sectors during the period of 2006–2015. In the first stage, according to the environmental pollution intensity, the manufacturing industry is divided into heavily polluting industry, moderately polluting industry, and lightly polluting industry. The second stage is employed the slacks-based measure (SBM)-undesirable method to study the sub-industries’ green energy-environmental efficiency under different environmental pollution intensities. Besides, the dynamic changes of technical innovation and efficiency among different industries are analyzed through the Malmquist productivity index. For the purpose of investigating the transmission mechanism of the Porter’s hypothesis and exploring the compound effects of environmental regulation and governance transition on green development, in the third stage, we use the panel data analysis to conduct more in-depth research on the relationship between environmental regulation, governance transition, and technical innovation. Results show that the highest average green energy-environmental efficiency is lightly polluting industry, which is 0.52, followed by the heavily polluting industry at 0.40, and the lowest is the moderately polluting industry, which is 0.32. By decomposing total factor productivity, heavily polluting industry is at the forefront of technical innovation. Panel data analysis results indicate that investment in research and development and governance transition could promote the growth of total factor productivity for manufacturing.

Environmental Regulation, Technological Innovation, and Export Competitiveness: An Empirical Study Based on China’s Manufacturing Industry

“…A possible explanation is that lightly polluting sub-industries are subject to less stringent environmental regulation and fail to achieve a strong innovation offset effect [46]. Similarly, Cheng et al [41] test the Porter's hypothesis based on a comparative analysis of sub-industries under different pollution intensities, and find that heavily polluting industry is at the forefront of technological innovation in China's manufacturing industry. Marconi [53] indicates that the RCA of 14 EU countries in both water-polluting industries and air-polluting industries remains stable or is enhanced significantly, while the competitiveness of the more clean industries is in decline.…”

“…An industry with more stringent environmental regulation policies expends more on reduction in pollution emissions. Hence, such expenditure, to a large extent, reflects the efficacy of an industry's environmental regulation policies and should be used to measure the stringency of such regulations [41]. Compared with other indices, including the pollution levy and emissions standards charged or formulated by the government, industrial expenditure on pollution discharge control can better reflect the actual intensity of emissions reduction [42].…”

“…Thus, this study divides the sample sub-industries into groups for regression and examines the heterogeneous effects of environmental regulation on export competitiveness. Existing research derives the intensity of pollution emissions by industry through linear standardization and divides manufacturing sub-industries accordingly into lightly-, moderately-, and heavily-polluting sub-industries [41]. With reference to the industrial classification method proposed by Cheng et al [41], this study re-estimates the export competitiveness of sub-industries using these three levels of pollution intensity.…”

“…Existing research derives the intensity of pollution emissions by industry through linear standardization and divides manufacturing sub-industries accordingly into lightly-, moderately-, and heavily-polluting sub-industries [41]. With reference to the industrial classification method proposed by Cheng et al [41], this study re-estimates the export competitiveness of sub-industries using these three levels of pollution intensity. The estimated outcomes for the subsamples are listed in Table 3, where columns (1) and (2), (3) and 4, and (5) and (6) represent the estimates for lightly, moderately, and heavily polluting sub-industries, respectively.…”

“…In fact, there exists evident heterogeneity in pollution intensity and economic development characteristic of China's manufacturing industry [41]. For instance, the production process of heavily polluting sub-industries is generally accompanied by high energy consumption and industrial wastewater or waste gas discharge.…”