An Empirical Research About The Effect Of Environmental Regulation Stringency On Industrial Structure Upgrading In China

China has been experiencing continuous economic growth since 1978 and especially during the first decade in the 21 st century, China has been developing at an amazing speed above 10%. However, such prosperity was based on the extensive mode of production, which was characterized by heavy pollution and huge energy consumption. Thus, the natural environment was no doubt suffering great damage. At present, it’s essential to realize the transition in development mode, while a huge contradict arises between such keen demand and the deteriorating environment. In terms of industrial structure upgrading, it becomes important to actively have social development and nature preservation coordinated and to transfer the original production mode.Since the last 60 s or the 70 s, a majority of scholars have paid attention to the issue of pollution, thus literatures concerning environmental regulation arose constantly. This paper links environmental regulation with industrial structure upgrading from three aspects: technological innovation, international trade, and social needs. Besides, empirical observation concerned is also conducted in this paper. The main conclusions are as follows: First, the amount of national pollution emission keeps growing, among which, the pollution growth rate of Middle China has surpassed the other two areas. Second, by establishing the calculation system of environmental regulation stringency, it’s found that the thirty provinces are seeing an obvious growth in environmental regulation stringency, which means that the government’s intervention in environmental pollution is constantly strengthened. Third, the paper establishes industrial structure upgrading indicator by adopting the core idea of labor productivity. The estimated extent of the industrial structure upgrading keeps improving, which can be attributed to two reasons: one is the rising proportion of the tertiary industry’s output in GDP; and the other is the increasing labor productivity of the tertiary industry which leading the industrial structure to a high-class direction.Based on the panel data of thirty provinces, the paper makes empirical research by using a multiple linear regression model and three conclusions are safely drawn. First, with each 1% increase in environmental regulation stringency, industrial structure upgrading will rise by 1.15%. Second, the present technological innovation, international trade, consumption need and investment need all positively prosper the industrial structure upgrading. Third, by introducing dummy variables and cross-terms, the paper gets the empirical result that the promotion effect of environmental regulation stringency on industrial structure upgrading proves the strongest for East China, which is closely followed by Middle China. For West China, such effect is the weakest.Therefore, the paper puts forward suggestions. First, the government should maintain the present environmental regulation stringency and moderately improves it. Environmental regulation measures of different type ought to be implemented, that is, to ensure the flexibility and variability of environmental regulation from pollution origins, production process and afterward pollution control. Middle China, to be mentioned, should pay more attention on the implementation of environmental regulation measures of different types. Second, the government ought to focus on improving enterprises’ capacity to conduct technological innovations. The existing export structure should be adjusted and improved. Meanwhile, stimulating domestic demands requires improving the income level of the residents to increase their consumption capacity. Besides, social investment should be leaded to production sectors with high output capacity in which resources are rationally allocated and efficiently utilized.