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Based on the unique micro-data of newly built polluting firms for the period of 2009–2018, this paper adopts the conditional logit model to empirically evaluate the impact of environmental regulations on the location choice of polluting firms. Moreover, we extend the theoretical model by considering that the environment regulations not only influence the pollution cost but also the level of technological innovation and labor cost. The empirical results show that polluting firms tend to flow into areas with stringent environmental regulations, which supports the Porter hypothesis, but the effect of environmental regulations have a divergent impact on heavily polluting firms. Heterogeneous analysis indicates that environmental regulations have shown a positive impact on the location choice of private and foreign-funded firms but no significant impact on that of state-owned firms; the impact of environmental regulation is consistent with pollution haven hypothesis for firms in the central region but is in line with Porter hypothesis for firms in other regions. Meanwhile, the probability of air polluting firms entering areas with stricter environmental regulations is higher than that of water-polluting ones. Finally, this paper further empirically tests the conduction mechanism, that is, environmental regulations can affect the location choice of polluting firms by affecting the regional technological innovation capabilities and labor cost.

The report of the 19th National Congress of the Communist Party of China emphasized the need to promote green development and strengthen the environmental protection system. China’s introduction of foreign investment has gradually shifted from emphasis on “quantity” to “quality” in the context of the new normal. In view of this, this paper discussed the mechanism of impact of FDI on China’s regional GTFP with the relationship between FDI and the regional GTFP as the logic starting point. The research results show that FDI has in general exerted a “pollution halo” effect in China, which affects the regional GTFP through technology and human capital spillover effects; FDI has non-linear impact on GTFP at different levels of environmental regulation and marketization; “pollution haven", “bottom line competition” and other phenomena will occur at low levels of environmental regulation and marketization; FDI will inhibit the increase in China’s regional GTFP; the impact of FDI on GTFP is regionally different, and the western and northeastern regions are “pollution havens” in China.

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