Study On The Environmental Effects Of Yangtze River Delta’s Processing Trade

As the most important trade pattern in China, processing trade provides an important driving force for the rapid growth of foreign trade and economy, it plays a significant role in upgrading industrial structure, efficiently using labor resources and offering jobs. Nevertheless, restrained by economic development and financial system, some local governments and processing trade enterprises have been recklessly in pursuit of economic and trade growth, as well as the trade related environmental policies and regulations are not sound, the environmental effects of processing trade are not taken seriously, which cause environmental pollution. In this context, analyzing the environmental effects of processing trade has both theoretical and practical significance. Based on the empirical data of Yangtze River Delta region, this paper explores and studies the environmental effects of processing trade from both theoretical and empirical research.Firstly, the paper analyzes the current situation of processing trade and environmental pollution in Yangtze River Delta region, the results show that:from1997to2010, processing trade occupies a main position in export trade, and the exports in Yangtze River Delta accounted for the proportion of exports in the whole country is rising all the way. Industrial waste emissions as well as air, water and soil pollution have experienced different changes. Jiangsu, Zhejiang, Shanghai also show some different trends in processing trade and environmental pollution.Secondly, this study inherits Grossman and Krueger (1995)’s environmental effects framework and analyzes scale, structure and technical effects of processing trade. The paper uses panel data unit root test, co-integration test and Granger causality test on the long-term equilibrium relationship between processing trade and environmental pollution. Then the paper uses fixed effects model to measure the three environmental effects. The results show that:processing trade development in Yangtze River Delta region is one of the reasons of environmental pollution, and expansion of processing trade increases environmental pollution in this region; structure effects and technical effects have positive impact on the environment which reduce the pollution; but currently, environmental policies in Yangtze River Delta region do not play positive role in reducing the pollution.According to the findings of this study, the paper proposed adjustment of industrial structure of processing trade, improving technical innovation, optimizing environmental regulations, playing the role of regional comparative advantage and some other suggestions.