Empirical Analysis Of How Envionmental Regulation Impact On Export Trade Of Manufacturing In China

In recent years, the rapid expansion of China’s manufacturing has created large-scale economic growth which undoubtedly caused great burden on our ecological environment. Thus it’s imminent to make positive and rational environmental regulation policy to curb the extemalities of export trade. However, due to the great differences on the level of pollution emissions in different industries, the influence of environmental regulation on export trade inevitably differs from industry. Given that, it is crucial for us to study how environmental regulation impact on export trade of different kinds of pollution manufacturing in China for the sustainable development of manufacturing’s foreign trade.In this background, this paper constructed an indicator of industrial pollution to measure the different pollution emission intensity of different industries, and divided China’s manufacture sectors into heavy pollution industry, moderate pollution industry and light pollution industry. Thereafter, in order to verify the relationships between environmental regulation and export trade of the three manufacture sectors, we built panel data models based on the HOV model and the calculation of environmental regulation intensity. The "trade cost effect" and "trade technique effect" of environmental regulation affect industrial export trade together. Empirical results show that:intensity of environmental regulation positively correlate with heavy and moderate pollution manufacturing. It means that environmental regulation can improve the ability to cope with environmental regulation by stimulating these industries to innovate, and the negative effects caused by "trade cost effect" can be offset by the positive effects arising from "trade technique effect". Moreover,the results also show that:intensity of environmental regulation and light pollution manufacturing have negative correlation, indicating that environmental regulation’s benefits conducted by the "trade technique effect" do not outweigh its adverse effects for the export trade of light pollution manufacturing at present.