The Impact of Environmental Regulation on Firm Export: Evidence from China’s Ecological Protection Red Line Policy?

Abstract

China conducted a comprehensive overhaul of its environmental regulation as of April 2014. The regulation, which calls for a holistic approach to protect the environment, is also called the “Ecological Protection Red Line” (Red Line). It sets comprehensive standards for pollutants and mandates provinces to implement the regulations. The Porter and pollution haven hypotheses were tested for the impact of the Red Line on firm exports using a sample of Chinese A-share firms from 2011 to 2017. Our findings are consistent with the Porter hypothesis. The implementation of the Red Line has a positive impact on a firm’s exports. The findings are robust to alternative metrics of exports and different sub-samples. A firm’s innovation activities (in terms of research and development investments) and production efficiency were found to be the transmission channels, corroborating the underlying logic of the Porter hypothesis. Policy implications are discussed.

The impact of energy consumption and merchandise exports on CO2emission in the United Nations geoscheme regions

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The Multifaceted Sustainable Development and Export Intensity of Emerging Market Firms under Financial Constraints: The Role of ESG and Innovative Activity

“…Meneto and Siedschlag [84], using a sample of Irish companies for 2012-2014, find that the implementation of environmental innovations has a significant positive effect on the entry of companies into foreign markets but does not significantly affect the volume of exports. Zhai et al [85] investigate the impact of countrylevel environmental regulation on the export performance of Chinese companies. e authors conclude that stricter environmental regulation has a positive effect on the company's exports.…”

Measuring the Influence of Environmental Policy on Economic Development of the Countries: EU-28 Scope

“…The research on micro-and meso-level gives an opportunity to verify Porter hypothesis, pollution haven hypothesis and other theories and hypotheses aimed at identifying the influence of EP on the economic results, innovativeness of the firms and allocation/relocation of "dirty" production. In particular, Zhai Liu and Chan (2019) have researched the impact of environmental regulation on firm export in China and tested Porter and pollution haven hypotheses. The authors have outlined that the setting-up of the environmental standards under the Red Line policy boosts firm exports.…”