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How Does Green Trade Affect the Environment? Evidence from China

Author

Listed:
  • Huiling Liu

    (School of Economics, Huazhong University of Science and Technology, Wuhan, China)

  • Heng Lei

    (School of Management, Huazhong University of Science and Technology, Wuhan, China)

  • Youcheng Zhou

    (Department of Accounting, Southampton Business School, University of Southampton, Southampton, UK)

Abstract

This study focuses on the impact of trade in environmental goods (green trade) on the environment. We found that green trade can decrease pollution levels by exploiting a panel of 277 Chinese cities from 2004 to 2013 and using the instrumental variable (IV) strategy. However, total trade openness is far less favorable to the environment. We also found that both green imports and exports are conducive to the Chinese environment, while ordinary green trade performs better than green processing trade. Nevertheless, the effects of green trade are restricted by a city's purchasing power and absorptive capacity, as well as the classifications of environmental goods. Furthermore, green trade mainly promotes local green technological progress to benefit the environment.

Suggested Citation

  • Huiling Liu & Heng Lei & Youcheng Zhou, 2022. "How Does Green Trade Affect the Environment? Evidence from China," Journal of Economic Analysis, Anser Press, vol. 1(1), pages 1-19, September.
    • Handle: RePEc:bba:j00001:v:1:y:2022:i:1:p:1-19:d:9
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    References listed on IDEAS

    as
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    3. Cherniwchan, Jevan, 2017. "Trade liberalization and the environment: Evidence from NAFTA and U.S. manufacturing," Journal of International Economics, Elsevier, vol. 105(C), pages 130-149.
    4. Daniel L. Millimet & Jayjit Roy, 2016. "Empirical Tests of the Pollution Haven Hypothesis When Environmental Regulation is Endogenous," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 31(4), pages 652-677, June.
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