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Trade Imbalance, Heterogeneous Firms and Pollution Emissions: Evidence from China’s Manufacturing Sector

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  • Ling-Yun He
  • Xi Lin

Abstract

China’s trade imbalance and environmental pollution have become a focus of world interest. As firms are those that are emitting pollutants, do trade imbalances affect firm-level pollution emissions? In this study, we use data on Chinese manufacturing firms to investigate the impacts of trade imbalances on firms’ pollution emissions. Our results indicate that trade imbalances (export-to-import ratio) are positively related to firms’ pollution emissions. Specifically, trade surpluses lead to an increase in pollution emissions, whereas trade deficits reduce emissions. These impacts are mainly due to change in the behavior of individual firms, including the scale, factor composition, and technical effects. Trade imbalances have heterogeneous impacts on firms with different types of ownership, in different sectors, and different provinces. Our study presents the first evidence on the impacts of trade imbalances on firm-level pollution emissions.

Suggested Citation

  • Ling-Yun He & Xi Lin, 2021. "Trade Imbalance, Heterogeneous Firms and Pollution Emissions: Evidence from China’s Manufacturing Sector," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(4), pages 1008-1033, March.
    • Handle: RePEc:mes:emfitr:v:57:y:2021:i:4:p:1008-1033
    DOI: 10.1080/1540496X.2019.1612742
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    Cited by:

    1. Xi Lin & Ling‐Yun He, 2023. "‘Going global’ and pollution in home country: Evidence from Chinese industrial firms," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(4), pages 1135-1174, October.
    2. Liurong Pan & Asad Amin & Nian Zhu & Abbas Ali Chandio & Eric Yaw Naminse & Aadil Hameed Shah, 2022. "Exploring the Asymmetrical Influence of Economic Growth, Oil Price, Consumer Price Index and Industrial Production on the Trade Deficit in China," Sustainability, MDPI, vol. 14(23), pages 1-22, November.

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