Export destinations and pollution reduction: Theory and evidence from Chinese enterprises

Much of existing analyses exploring connection between trade and environmental results often adopts a simplistic classification, dividing trade into exports and imports. This approach tends to overlook the complex variety of trading partners involved. However, in light of ongoing global crises and the shifting dynamics of international trade, existing theories require refinement to more effectively predict how trade with different partners impacts the environment. To investigate how export markets impact emission levels, we develop a microeconomic theoretical framework and then proceed with an empirical analysis using data from Chinese enterprises. Our results suggest that environmental impact of exports varies based upon the destination country. Exporting to both high-tech and low-tech nations contributes to decrease of emission intensity, and effect is more significant when enterprises engage in trade with high-tech countries. Additionally, while the expansion of production scale post-export can drive an increase in total emissions, this effect is mitigated by improvements in productivity and rising abatement costs. As a result, the overall emissions from firms show little variation, regardless of whether their exports are directed to high-tech or low-tech nations. This study thus provides valuable policy insights for China's open economy development amid multiple crises.