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Does Environmental Regulation Affect Circular Economy Performance? Evidence from China

Author

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  • Baoting Peng

    (School of Economics and Management, Shanghai Ocean University, Shanghai 201306, China)

  • Xin Shen

    (School of Economics and Management, Shanghai Ocean University, Shanghai 201306, China)

Abstract

Environmental regulation is an important means to solve the environmental pollution challenges faced by economic development. Under the predicament of economic growth facing enormous environmental challenges, this paper aims to explore whether environmental regulation has a promoting effect on the circular economy performance, construct the mechanism through which environmental regulation impacts circular economy performance, as well as test regional heterogeneity on the impact of environmental regulation on circular economy performance under different levels of economic development. Exploring these factors is of great significance for meeting people’s demand for better living environments and promoting green and sustainable economic development. This paper takes interprovincial panel data of China from 2011 to 2022 as the sample and adopts structural equation modeling to explore the influence mechanism of environmental regulation on circular economy performance by constructing a measurement system of environmental regulation and circular economy performance. The results indicate the following: environmental regulation has a significant role in promoting circular economy performance, and there is a partial mediating effect of industrial structure upgrading within it; heterogeneity analysis shows that the promoting effect of environmental regulation on circular economy performance varies according to the different levels of regional economic development. Therefore, environmental regulation policies should be moderately adjusted to promote balanced economic and environmental development; environmental regulation policies should be enriched to promote industrial structure transformation and upgrading; regional synergistic governance should be improved to facilitate the promotion of the circular economy.

Suggested Citation

  • Baoting Peng & Xin Shen, 2024. "Does Environmental Regulation Affect Circular Economy Performance? Evidence from China," Sustainability, MDPI, vol. 16(11), pages 1-19, May.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:11:p:4406-:d:1400012
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    1. Jianhao Zhao & Wided Ragmoun & Ziguang Dong & Muhammad Atif Nawaz & Abdisamat Sattarov, 2026. "Circular Economy Implementation Through AI Adoption, CSR and Green Finance: The Mediating Role of Green Product Innovation and Green Supply Chain," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 33(2), pages 2432-2447, March.
    2. Prince Brefo Boakye & John Yaw Akparep & Andrews Salakpi, 2025. "Enhancing Environmental Quality through Board Dynamics: The Role of Environmental Regulations in Advancing Circular Economy in the SSA Region," Circular Economy and Sustainability, Springer, vol. 5(3), pages 1757-1783, June.

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