Does Environmental Regulation Affect The Export Of China’s Dirty Industries?

Does stricter environmental regulation influence the export competitiveness ofpollution-intensive industries? For the pollution-intensive industries with different pollutionintensity, is the impact consistent? This paper, based on the gravity model and panel data duringthe period2001-2010, focuses on empirical analysis whether the implementation of morestringent regulations has indeed affected comparative advantages of five pollution-intensiveindustries’ exports, estimating with fixed effect vector decomposition (FEVD) method. Ourfindings show that: stringent endogenous environmental regulation can significantly enhancecomparative advantage of five pollution-intensive industries’ exports. But exogenousenvironmental regulation measured with the environmental regulation strength (ERS) and CO2emissions intensity has different effect on comparative advantage of five pollution-intensiveindustries’ exports. When the environmental regulation strength (ERS) is considered as anexogenous indicator of environmental regulation, stringent endogenous environmental regulationwill promote the export of non-metallic mineral manufactures, ferrous metal smelting and rollingprocessing industry and non-ferrous metal smelting and rolling processing industry. The squareterm of exogenous environmental regulation shows the relationship between exogenousenvironmental regulation and exports of paper and paper products industry and chemical rawmaterials and products processing industry is the shape of “U”, while for the remaining threepollution-intensive industries, the relationship is the shape of inverted “U”. Therefore, concernsthat improving the level of environmental regulation will reduce their export competitiveness ofpollution-intensive industries are unnecessary; on the contrary, moderate increasedenvironmental regulation is conducive to the formation of export competitiveness. In addition,on the basic of analyzing the impact of traditional pollutants environmental regulations on exportcompetitiveness, we also study how the implementation of a carbon tax affects exportcompetitiveness of energy-intensive industries, and found that there is a negative effect thatcarbon tax imposed on export competitiveness of energy-intensive industries.