Environmental Technical Standards and the Green Transition of China’s Manufacturing Industry

Wan Panbing (万攀兵)1 , Yang Mian (杨冕)2 and Chen Lin (陈林)3*

1,2 School of Economics and Management, Center for Population, Resource and Environmental Economics, Wuhan University, Wuhan, China

3 Institute of Industrial Economics, and Institute of Low Carbon and Sustainable Development, Jinan University, Guangzhou, China

Abstract: Distinct from the existing literature conforming to the Porter hypothesis which emphasizes the technological innovation mechanism, this paper examines the mechanism of technological transformation through which environmental technical standards influence the manufacturing industry in reducing emissions and improving efficiency (i.e. green transition). Furthermore, drawing upon enterprise samples from the databases of Chinese Industrial Enterprises and Chinese Industrial Pollution Sources from Major Monitored Enterprises, it empirically validates the results of the theoretical analysis. Overall, our research reveals that environmental technical standards can propel manufacturing enterprises to reduce pollution and increase productivity by following an incremental path of technological transformation, thereby achieving a green transition. Moreover, environmental technical standards indirectly promote green technology innovation in the upstream equipment manufacturing enterprises. Heterogeneity analysis further shows that environmental technical standards have a stronger effect of green transition on those companies with higher pollution emission intensity, lower productivity, slower capital renewal and stronger financing capacity prior to implementing the environmental policies.

Keywords: Environmental technical standards green transition, technological transformation, Porter hypothesis

JEL Classification Code: L25, L51, Q55

DOI: 10.19602/j.chinaeconomist.2022.09.02