Abstract
Assessing the environmental impact of industrial policy is of great importance to China’s industrial green transformation and high-quality development, while this topic receives little attention in the literature. Based on the panel data of 29 manufacturing industrial sectors in China’s 30 provinces from 2006 to 2015, using a model that includes the year, province, and industry fixed-effect, this paper fills the gap by exploring whether and how industrial policy affects carbon emission in Chinese manufacturing. The result shows that industrial policy significantly increases carbon emission in supported industries by 10.3%, which is achieved by increasing industrial energy consumption, relaxing government environmental regulation, and encouraging enterprises to invest more in fixed assets. Further, the effects of industrial policy on carbon emission are heterogeneous in many aspects. In the central and western regions, technology-intensive industries, industries with stronger government intervention, industries with higher exports, industries supported by both central and local governments, and during the 12th Five-Year Plan, the industrial policy will increase carbon emissions more. Our findings for the first time indicate the negative impact of industrial policies on carbon emission reduction in the Chinese manufacturing industry, which implies that traditional selective industrial policies in developing countries like China need a paradigm shift to achieve green development.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Data availability
Data that support the findings of this study are publicly available in the China Industrial Statistical Yearbook and China Price Statistics Yearbook published by the National Bureau of Statistics of China, and China Emission Accounts & Datasets available from www.ceads.net.
Notes
In this section, we directly construct new industrial policy variables for central and local government policy, which is different from the moderating effect model that uses interaction terms in other parts of the heterogeneity analysis.
For example, the central government’s 12th Five-Year Plan starts to support the petroleum industry, and the number of local government industrial policies supporting the petroleum industry rose from 11 to 17. In addition, the paper product industry has never been supported by the central government. Accordingly, the number of times that the paper product industry was supported by local governments has dropped from 11 in the 11th Five-Year Plan to 1 in the 12th Five-Year Plan.
References
Aghion P, Cai J, Dewatripont M, Du L, Harrison A, Legros P (2015) Industrial policy and competition. Am Econ J Macroecon 7:1–32. https://doi.org/10.1257/mac.20120103
Alder S, Shao L, Zilibotti F (2016) Economic reforms and industrial policy in a panel of Chinese cities. J Econ Growth 21:305–349. https://doi.org/10.1007/s10887-016-9131-x
Andreoni A, Chang HJ (2019) The political economy of industrial policy: structural interdependencies, policy alignment and conflict management. Struct Chang Econ Dyn 48:136–150. https://doi.org/10.1016/j.strueco.2018.10.007
Barbieri E, Di Tommaso MR, Tassinari M, Marozzi M (2019) Selective industrial policies in China: investigating the choice of pillar industries. Int J Emerg Mark 16:264–282. https://doi.org/10.1108/IJOEM-02-2018-0105
Baron RM, Kenny DA (1986) The moderator-mediator variable distinction in social psychological research. Conceptual, strategic, and statistical considerations. J Pers Soc Psychol 51:1173–1182. https://doi.org/10.1037/0022-3514.51.6.1173
Bertoli S, Dequiedt V, Zenou Y (2016) Can selective immigration policies reduce migrants’ quality? J Dev Econ 119:100–109. https://doi.org/10.1016/j.jdeveco.2015.11.002
Cao K, Xu X, Wu Q, Zhang Q (2017) Optimal production and carbon emission reduction level under cap-and-trade and low carbon subsidy policies. J Clean Prod 167:505–513. https://doi.org/10.1016/j.jclepro.2017.07.251
Castillo V, Figal Garone L, Maffioli A, Salazar L (2017) The causal effects of regional industrial policies on employment: a synthetic control approach. Reg Sci Urban Econ 67:25–41. https://doi.org/10.1016/j.regsciurbeco.2017.08.003
Chen Y, Li H, Zhou LA (2005) Relative performance evaluation and the turnover of provincial leaders in China. Econ Lett 88:421–425. https://doi.org/10.1016/j.econlet.2005.05.003
Chen D, Li OZ, Xin F (2017) Five-year plans. China Fin Conseq China J Account Res 10:189–230. https://doi.org/10.1016/j.cjar.2017.06.001
Chen X, Chen YE, Chang CP (2019) The effects of environmental regulation and industrial structure on carbon dioxide emission: a non-linear investigation. Environ Sci Pollut Res 26(29):30252–30267. https://doi.org/10.1007/s11356-019-06150-6
Criscuolo C, Martin R, Overman HG, Van Reenen J (2019) Some causal effects of an industrial policy. Am Econ Rev 109:48–85. https://doi.org/10.1257/aer.20160034
Dong Z, Chen W, Wang S (2020) Emission reduction target, complexity and industrial performance. J Environ Manag 260:110148. https://doi.org/10.1016/j.jenvman.2020.110148
Emir F, Bekun FV (2019) Energy intensity, carbon emissions, renewable energy, and economic growth nexus: new insights from Romania. Energy Environ 30(3):427–443. https://doi.org/10.1177/0958305X18793108
Fan R, Dong L, Yang W, Sun J (2017) Study on the optimal supervision strategy of government low-carbon subsidy and the corresponding efficiency and stability in the small-world network context. J Clean Prod 168:536–550. https://doi.org/10.1016/j.jclepro.2017.09.044
Fang G, Lu L, Tian L, He Y, Bai Y (2020a) Can China achieve the energy-saving and emission reducing objectives during the “13th Five-Year-Plan”? —— a systematic evolutionary analysis. J Clean Prod 262:121256. https://doi.org/10.1016/j.jclepro.2020.121256
Fang G, Lu L, Tian L, he, Y., & Yin, H. (2020b) Research on the influence mechanism of carbon trading on new energy—a case study of ESER system for China. Physica A: Stat Mech App 545:123572. https://doi.org/10.1016/j.physa.2019.123572
Fang G, Tian L, Yang Z (2020c) The construction of a comprehensive multidimensional energy index. Energy Econ 90:104875. https://doi.org/10.1016/j.eneco.2020.104875
Fang G, Wang Q, Tian L (2020d) Green development of Yangtze River Delta in China under Population-Resources-Environment-Development-Satisfaction perspective. Sci Total Environ 727:138710. https://doi.org/10.1016/j.scitotenv.2020.138710
Feng L, Liao W (2016) Legislation, plans, and policies for prevention and control of air pollution in China: achievements, challenges, and improvements. J Clean Prod 112:1549–1558. https://doi.org/10.1016/j.jclepro.2015.08.013
Feng JC, Yan J, Yu Z, Zeng X, Xu W (2018) Case study of an industrial park toward zero carbon emission. Appl Energy 209:65–78. https://doi.org/10.1016/j.apenergy.2017.10.069
Fischer C (2017) Environmental protection for sale: strategic green industrial policy and climate finance. Environ Resour Econ 66:553–575. https://doi.org/10.1007/s10640-016-0092-5
Gao C, Ge H (2020) Spatiotemporal characteristics of China’s carbon emissions and driving forces: a Five-Year Plan perspective from 2001 to 2015. J Clean Prod 248:119280. https://doi.org/10.1016/j.jclepro.2019.119280
Gu A, Teng F, Lv Z (2016) Exploring the nexus between water saving and energy conservation: insights from industry sector during the 12th Five-Year Plan period in China. Renew Sust Energ Rev 59:28–38. https://doi.org/10.1016/j.rser.2015.12.285
Heckman JJ (2013) Sample selection bias as a specification error. Appl Econ 31:129–137. https://doi.org/10.2307/1912352
Howell ST (2018) Joint ventures and technology adoption: a Chinese industrial policy that backfired. Res Policy 47:1448–1462. https://doi.org/10.1016/j.respol.2018.04.021
Howes M, Wortley L, Potts R, Dedekorkut-Howes A, Serrao-Neumann S, Davidson J, Smith T, Nunn P (2017) Environmental sustainability: a case of policy implementation failure? Sustainability 9:165. https://doi.org/10.3390/su9020165
Hu Y (2012) Energy conservation assessment of fixed-asset investment projects: an attempt to improve energy efficiency in China. Energy Policy 43:327–334. https://doi.org/10.1016/j.enpol.2012.01.009
Huang Z, Li L, Ma G, Xu LC (2017) Hayek, local information, and commanding heights: decentralizing state-owned enterprises in China. Am Econ Rev 107:2455–2478. https://doi.org/10.1257/aer.20150592
Huang X, Kabir R, Zhang L (2018) Government ownership and the capital structure of firms: analysis of an institutional context from China. China J Account Res 11:171–185. https://doi.org/10.1016/j.cjar.2018.07.001
Huang J, Chen X, Yu K, Cai X (2020) Effect of technological progress on carbon emissions: new evidence from a decomposition and spatiotemporal perspective in China. J Environ Manag 274:110953. https://doi.org/10.1016/j.jenvman.2020.110953
Jin Y, Andersson H, Zhang S (2016) Air pollution control policies in China: a retrospective and prospects. Int J Environ Res Public Health 13:1219. https://doi.org/10.3390/ijerph13121219
Kostka G, Nahm J (2017) Central-local relations: recentralization and environmental governance in China. China Q 231:567–582. https://doi.org/10.1017/S0305741017001011
Lee E, Walker M, Zeng C (2014) Do Chinese government subsidies affect firm value? Accounting. Organ Soc 39:149–169. https://doi.org/10.1016/j.aos.2014.02.002
Li H, Zhou LA (2005) Political turnover and economic performance: the incentive role of personnel control in China. J Public Econ 89:1743–1762. https://doi.org/10.1016/j.jpubeco.2004.06.009
Li Y, Wei Y, Shan S, Tao Y (2018) Pathways to a low-carbon economy: estimations on macroeconomic costs and potential of carbon emission abatement in Beijing. J Clean Prod 199:603–615. https://doi.org/10.1016/j.jclepro.2018.07.093
Li Z, Shao S, Shi X, Sun Y, Zhang X (2019) Structural transformation of manufacturing, natural resource dependence, and carbon emissions reduction: evidence of a threshold effect from China. J Clean Prod 206:920–927. https://doi.org/10.1016/j.jclepro.2018.09.241
Lin B, Wang M (2019) Dynamic analysis of carbon dioxide emissions in China’s petroleum refining and coking industry. Sci Total Environ 671:937–947. https://doi.org/10.1016/j.scitotenv.2019.03.321
Liu Z, Zhang H, Zhang YJ, Zhu TT (2020) How does industrial policy affect the eco-efficiency of industrial sector? Evidence from China. Appl Energy 272:115206. https://doi.org/10.1016/j.apenergy.2020.115206
Meng F, Su B, Thomson E, Zhou D, Zhou P (2016) Measuring China’s regional energy and carbon emission efficiency with DEA models: a survey. Appl Energy 183:1–21. https://doi.org/10.1016/j.apenergy.2016.08.158
Pei Y, Zhu Y, Liu S, Wang X, Cao J (2019) Environmental regulation and carbon emission: the mediation effect of technical efficiency. J Clean Prod 236:117599. https://doi.org/10.1016/j.jclepro.2019.07.074
Peneder M (2016) Competitiveness and industrial policy: from rationalities of failure towards the ability to evolve. Camb J Econ 41:bew025. https://doi.org/10.1093/cje/bew025
Price L, Levine MD, Zhou N, Fridley D, Aden N, Lu H, McNeil M, Zheng N, Qin Y, Yowargana P (2011) Assessment of China’s energy-saving and emission-reduction accomplishments and opportunities during the 11th Five Year Plan. Energy Policy 39:2165–2178. https://doi.org/10.1016/j.enpol.2011.02.006
Qin D, Song H (2009) Sources of investment inefficiency: the case of fixed-asset investment in China. J Dev Econ 90:94–105. https://doi.org/10.1016/j.jdeveco.2008.06.001
Ren S, Yuan B, Ma X, Chen X (2014) International trade, FDI (foreign direct investment) and embodied CO2 emissions: a case study of China’s industrial sectors. China Econ Rev 28:123–134. https://doi.org/10.1016/j.chieco.2014.01.003
Shi X, Xu Z (2018) Environmental regulation and firm exports: evidence from the eleventh Five-Year Plan in China. J Environ Econ Manag 89:187–200. https://doi.org/10.1016/j.jeem.2018.03.003
Shi J, Zhang X (2018) How to explain corporate investment heterogeneity in China’s new normal: structural models with state-owned property rights. China Econ Rev 50:1–16. https://doi.org/10.1016/j.chieco.2017.10.005
Tian Y, Xiong S, Ma X, Ji J (2018) Structural path decomposition of carbon emission: a study of China’s manufacturing industry. J Clean Prod 193:563–574. https://doi.org/10.1016/j.jclepro.2018.05.047
Wang S, Li C, Zhou H (2019) Impact of China’s economic growth and energy consumption structure on atmospheric pollutants: based on a panel threshold model. J Clean Prod 236:117694. https://doi.org/10.1016/j.jclepro.2019.117694
Wang Q, Li S, Pisarenko Z (2020) Modeling carbon emission trajectory of China, US and India. J Clean Prod 258:120723. https://doi.org/10.1016/j.jclepro.2020.120723
Wang KL, Zhao B, Ding LL, Miao Z (2021) Government intervention, market development, and pollution emission efficiency: evidence from China. Sci Total Environ 757:143738. https://doi.org/10.1016/j.scitotenv.2020.143738
Wu L, Gong Z (2020) Can national carbon emission trading policy effectively recover GDP losses? A new linear programming-based three-step estimation approach. J Clean Prod 125052. https://doi.org/10.1016/j.jclepro.2020.125052
Wu J, Wei YD, Chen W, Yuan F (2019a) Environmental regulations and redistribution of polluting industries in transitional China: understanding regional and industrial differences. J Clean Prod 206:142–155. https://doi.org/10.1016/j.jclepro.2018.09.042
Wu Y, Zhu X, Groenewold N (2019b) The determinants and effectiveness of industrial policy in china: A study based on Five-Year Plans. China Econ Rev 53:225–242. https://doi.org/10.1016/j.chieco.2018.09.010
Xu Y (2011) The use of a goal for SO2 mitigation planning and management in China’s 11th Five-Year Plan. J Environ Plan Manag 54:769–783. https://doi.org/10.1080/09640568.2010.528944
Xu B, Lin B (2016) Reducing carbon dioxide emissions in China’s manufacturing industry: a dynamic vector autoregression approach. J Clean Prod 131:594–606. https://doi.org/10.1016/j.jclepro.2016.04.129
Xu R, Lin B (2017) Why are there large regional differences in CO2 emissions? Evidence from China’s manufacturing industry. J Clean Prod 140:1330–1343. https://doi.org/10.1016/j.jclepro.2016.10.019
Xu JH, Fan Y, Yu SM (2014) Energy conservation and CO2 emission reduction in China’s 11th Five-Year Plan: a performance evaluation. Energy Econ 46:348–359. https://doi.org/10.1016/j.eneco.2014.10.013
Xu SC, He ZX, Long RY, Chen H, Han HM, Zhang WW (2016) Comparative analysis of the regional contributions to carbon emissions in China. J Clean Prod 127:406–417. https://doi.org/10.1016/j.jclepro.2016.03.149
Xu SC, Han HM, Zhang WW, Zhang QQ, Long RY, Chen H, He ZX (2017) Analysis of regional contributions to the national carbon intensity in China in different Five-Year Plan periods. J Clean Prod 145:209–220. https://doi.org/10.1016/j.jclepro.2017.01.044
Yan J, Su B (2020) What drive the changes in China’s energy consumption and intensity during 12th Five-Year Plan period? Energy Policy 140:111383. https://doi.org/10.1016/j.enpol.2020.111383
Yao Y, Jiao J, Han X, Wang C (2019) Can constraint targets facilitate industrial green production performance in China? Energy-saving target vs emission-reduction target. J Clean Prod 209:862–875. https://doi.org/10.1016/j.jclepro.2018.10.274
Yu S, Zheng S, Li X, Li L (2018) China can peak its energy-related carbon emissions before 2025: evidence from industry restructuring. Energy Econ 73:91–107. https://doi.org/10.1016/j.eneco.2018.05.012
Yu Z, Dong J, Feng Y (2020) The impacts of the government industrial plans on China’s exports and trade balance. J Contemp China 29:141–158. https://doi.org/10.1080/10670564.2019.1621525
Yuan X, Zuo J (2011) Transition to low carbon energy policies in China—from the Five-Year Plan perspective. Energy Policy 39:3855–3859. https://doi.org/10.1016/j.enpol.2011.04.017
Zeng Y, Cao Y, Qiao X, Seyler BC, Tang Y (2019) Air pollution reduction in China: recent success but great challenge for the future. Sci Total Environ 663:329–337. https://doi.org/10.1016/j.scitotenv.2019.01.262
Zhang H, Xu K (2016) Impact of environmental regulation and technical progress on industrial carbon productivity: an approach based on proxy measure. Sustainability 8:819. https://doi.org/10.3390/su8080819
Zhang W, Wang J, Zhang B, Bi J, Jiang H (2015) Can china comply with its 12th five-year plan on industrial emissions control: a structural decomposition analysis. Environ Sci Technol 49:4816–4824. https://doi.org/10.1021/es504529x
Zhang J, Jiang H, Liu G, Zeng W (2018) A study on the contribution of industrial restructuring to reduction of carbon emissions in China during the five Five-Year Plan periods. J Clean Prod 176:629–635. https://doi.org/10.1016/j.jclepro.2017.12.133
Zhang W, Li G, Uddin MK, Guo S (2020a) Environmental regulation, foreign investment behavior, and carbon emissions for 30 provinces in China. J Clean Prod 248:119208. https://doi.org/10.1016/j.jclepro.2019.119208
Zhang Y, Li S, Luo T, Gao J (2020b) The effect of emission trading policy on carbon emission reduction: evidence from an integrated study of pilot regions in China. J Clean Prod 265:121843. https://doi.org/10.1016/j.jclepro.2020.121843
Zhang Y, Li X, Jiang F, Song Y, Xu M (2020c) Industrial policy, energy and environment efficiency: evidence from Chinese firm-level data. J Environ Manag 260:110123. https://doi.org/10.1016/j.jenvman.2020.110123
Zhao X, Sun B (2016) The influence of Chinese environmental regulation on corporation innovation and competitiveness. J Clean Prod 112:1528–1536. https://doi.org/10.1016/j.jclepro.2015.05.029
Zheng J, Mi Z, Coffman DM, Milcheva S, Shan Y, Guan D, Wang S (2019) Regional development and carbon emissions in China. Energy Econ 81:25–36. https://doi.org/10.1016/j.eneco.2019.03.003
Zhou J, Mao XQ, Hu T, Zeng A, Xing YK, Corsetti G (2016) Implications of the 11th and 12th Five-Year Plans for energy conservation and CO2 and air pollutants reduction: a case study from the city of Urumqi. China J Clean Prod 112:1767–1777. https://doi.org/10.1016/j.jclepro.2015.08.015
Zhou B, Zhang C, Song H, Wang Q (2019) How does emission trading reduce China’s carbon intensity? An exploration using a decomposition and difference-in-differences approach. Sci Total Environ 676:514–523. https://doi.org/10.1016/j.scitotenv.2019.04.303
Funding
Major project funding for social science research base in Fujian province social science planning (FJ2020MJD2015).
Author information
Authors and Affiliations
Contributions
L.S.: conceptualization, methodology, software, investigation, data curation, formal analysis, writing—original draft; X.Z.: conceptualization, writing—original draft, project administration, supervision.
Corresponding author
Ethics declarations
Ethics approval and consent to participate
Not applicable.
Consent for publication
Not applicable.
Competing interests
The authors declare no competing interests.
Additional information
Responsible Editor: Roula Inglesi-Lotz
Publisher’s note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
About this article
Cite this article
Song, L., Zhou, X. How does industrial policy affect manufacturing carbon emission? Evidence from Chinese provincial sub-sectoral data. Environ Sci Pollut Res 28, 61608–61622 (2021). https://doi.org/10.1007/s11356-021-15107-7
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11356-021-15107-7