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Has China's war on pollution slowed the growth of its manufacturing and by how much? Evidence from the Clean Air Action

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  • Li, Xiao
  • Qiao, Yuanbo
  • Shi, Lei

Abstract

We provide the first causal estimate of the aggregate effect of the 2013–2017 Clean Air Action, one of the largest and most recent environmental programs in China, on the growth of the manufacturing industry. Using a quasi-experimental approach, we find that the Clean Air Action significantly reduced the manufacturing output in the Beijing-Tianjin-Hebei region, which was subject to the most stringent air pollution regulation, by 6.7% during its first two years of implementation. The losses add up to 408.7 billion yuan (2013 price level), equal to 6.5% of the regional GDP in 2013. The action slowed the growth of manufacturing in Hebei and Tianjin by 9.6% and 5.9%, respectively. We find no evidence that it caused a significant reduction of manufacturing output in Beijing. The heterogeneous treatment effects can be explained by the difference in industrial structure between Beijing, Tianjin, and Hebei. Our analysis empirically suggests that the Clean Air Action helped drive the structural change of the Chinese economy by substantially suppressing “dirty” manufacturing sectors.

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  • Li, Xiao & Qiao, Yuanbo & Shi, Lei, 2019. "Has China's war on pollution slowed the growth of its manufacturing and by how much? Evidence from the Clean Air Action," China Economic Review, Elsevier, vol. 53(C), pages 271-289.
    • Handle: RePEc:eee:chieco:v:53:y:2019:i:c:p:271-289
    DOI: 10.1016/j.chieco.2018.08.015
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    Cited by:

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    2. Yongliang Yang & Jing Fang & Wen Wang & Yan Li & Yi Li, 2021. "The Impact of Air Quality on Effective Labor Supply: Based on the Survey Data of Zhejiang Province in China," Sustainability, MDPI, vol. 13(7), pages 1-22, April.
    3. Wang, Yuze & Eriksson, Tor & Luo, Nengsheng, 2023. "The health impacts of two policies regulating SO2 air pollution: Evidence from China," China Economic Review, Elsevier, vol. 78(C).
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    5. Zhihua Tian & Yanfang Tian & Yang Chen & Shuai Shao, 2020. "The economic consequences of environmental regulation in China: From a perspective of the environmental protection admonishing talk policy," Business Strategy and the Environment, Wiley Blackwell, vol. 29(4), pages 1723-1733, May.
    6. Ren Wang & Yuxiang Bian & Han Gao & Jie Hou, 2023. "Optimal Environmental Policy for Heterogeneous Governments in China," IJERPH, MDPI, vol. 20(4), pages 1-12, February.
    7. Kuang, Yunming & Lin, Boqiang, 2022. "Natural gas resource utilization, environmental policy and green economic development: Empirical evidence from China," Resources Policy, Elsevier, vol. 79(C).
    8. Shulin Wang & Yongtao Li & Mahfuzul Haque, 2019. "Evidence on the Impact of Winter Heating Policy on Air Pollution and Its Dynamic Changes in North China," Sustainability, MDPI, vol. 11(10), pages 1-15, May.
    9. Shuai Chen & Chen Ji & Songqing Jin, 2022. "Costs of an environmental regulation in livestock farming: Evidence from pig production in rural China," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(2), pages 541-563, June.

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    More about this item

    Keywords

    Air pollution; Environmental regulation; Economic cost; Quasi-experiment; Porter Hypothesis;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment

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