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Can China’s Policy of Carbon Emissions Trading Optimize Manufacturing Structure? Evidence from Guangdong Based on a Synthetic Control Approach

Author

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  • Yutao Lei

    (School of Economics and Finance, South China University of Technology, Guangzhou 510006, China)

  • Xuan Zhang

    (School of Economics and Finance, South China University of Technology, Guangzhou 510006, China)

  • Wenxiang Peng

    (School of Economics and Finance, South China University of Technology, Guangzhou 510006, China)

Abstract

On 16 July 2021, the national carbon emissions trading market opened, and the national carbon market officially started online trading. However, it is still unclear whether the carbon emissions trading policy can effectively optimize the manufacturing structure. We studied the experiment of the carbon emissions trading policy that has been ongoing in Guangdong, China, since 2013 to assess the impact of this policy on the manufacturing structure in Guangdong Province compared to other provinces in mainland China that have not implemented a carbon trading pilot policy. The methodology uses a synthetic control method. Using this method, a “synthetic Guangdong” was constructed using data from 23 provinces (municipalities and autonomous regions) in mainland China that did not implement carbon trading policies from 2009 to 2019. The synthetic province had similar observed characteristics to Guangdong before the carbon emissions trading experiment in 2013. Therefore, manufacturing structure differences between Guangdong and the synthetic province after 2013 could be attributed only to the carbon emissions trading policy. The conclusion indicates that in the short term, the carbon emissions trading policy implemented in 2013 can significantly promote manufacturing upgrading and manufacturing greening in Guangdong Province. This policy can optimize the manufacturing structure of Guangdong Province through improving the technological innovation of enterprises and increasing foreign direct investment. Therefore, in regions whose manufacturing structure is similar to Guangdong Province, implementing a carbon emissions trading policy can promote manufacturing upgrading and manufacturing greening.

Suggested Citation

  • Yutao Lei & Xuan Zhang & Wenxiang Peng, 2022. "Can China’s Policy of Carbon Emissions Trading Optimize Manufacturing Structure? Evidence from Guangdong Based on a Synthetic Control Approach," Sustainability, MDPI, vol. 14(6), pages 1-23, March.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:6:p:3302-:d:769653
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