Environmental Governance Effect of the Transformation of Export Trade Mode: Empirical Evidence from 194 Cities in China

Abstract

As one of the developing countries, China's export trade mode (ETM) has gradually shifted from processing trade to general trade. Is the deterioration of China's environmental pollution caused by the transformation of ETM? Based on the panel data from 194 cities in China from 2000 to 2016, this paper investigates the impact of ETM transformation on the environmental pollution and its internal mechanism. The results show that: the ETM is gradually shifting from processing trade to general trade, environmental pollution will deteriorate first and then improve, that is, showing a significant “inverted U-shaped” relationship between the transformation of ETM and environmental pollution. Through the robustness test of the threshold, and SYS-GMM model, the results are still valid. The mechanism research shows that the upgrading of industrial structure, energy structure, industrial agglomeration, environmental protection investment and resource allocation are the main mechanism that the transformation of ETM affect environmental pollution. The conclusions of this study can provide empirical evidence for the process that the environmental pollution level of developing countries deteriorated and then improved during the process of transforming from processing export trade to general export trade.