IDEAS home Printed from https://ideas.repec.org/a/wly/mgtdec/v46y2025i4p2190-2205.html
   My bibliography  Save this article

The impact of reducing trade barriers on enterprises' pollution emissions: Evidence from China

Author

Listed:
  • Lianying Hong
  • Xujun Liu
  • Bei Liu
  • Kewei Cao
  • Qiu Xia

Abstract

Trade and pollution are important issues for people's well‐being. However, less attention has been paid to the study of changes in international trade rules affecting the emission behavior of micro firms. This paper takes the quota restriction of the multi‐fiber arrangement (MFA) lifted as an exogenous impact and explores the impact of trade barriers reduction on pollution emissions of textile industries using the difference‐in‐differences (DID) method. The results show that (1) after the quota restriction of the MFA was lifted, the reduction of trade barriers increased the pollution emissions of the textile industry. The enterprises' SO2 emission intensity with trade barriers reduced increases by 8.1% compared to the industries with trade barriers that have not been reduced. (2) The impact of the trade barrier reduction on enterprises' pollution emissions varies with the type of enterprise ownership, export nature, and enterprise scale. For private enterprises, export enterprises, and large‐scale enterprises, the promotion effect of trade barrier reduction on enterprises' pollution emissions is more significant. (3) The mechanism test results show that the increase in SO2 emission intensity is mainly caused by the increase in the market share of enterprises, the deterioration of energy structure, and the increase in pollution output of enterprises. Therefore, it is critical to reduce enterprises' pollution emissions by maintaining a reasonable market share, optimizing energy structures, and increasing investment in pollution treatment equipment. This study reveals that changes in MFA international trade rules have profoundly influenced the production decision‐making behavior of companies in exporting countries, producing deep implications for enterprise pollution emission behavior and providing empirical evidence and management guidance for developing countries' development of environmentally friendly trade policies and responses to trade‐induced environmental pollution shocks.

Suggested Citation

  • Lianying Hong & Xujun Liu & Bei Liu & Kewei Cao & Qiu Xia, 2025. "The impact of reducing trade barriers on enterprises' pollution emissions: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 46(4), pages 2190-2205, June.
    • Handle: RePEc:wly:mgtdec:v:46:y:2025:i:4:p:2190-2205
    DOI: 10.1002/mde.4087
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/mde.4087
    Download Restriction: no
    File URL: https://libkey.io/10.1002/mde.4087?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Liu, Mengdi & Tan, Ruipeng & Zhang, Bing, 2021. "The costs of “blue sky”: Environmental regulation, technology upgrading, and labor demand in China," Journal of Development Economics, Elsevier, vol. 150(C).
    2. Gong, Shixin & Shao, Cheng & Zhu, Li, 2019. "An energy efficiency integration optimization scheme for ethylene production with respect to multiple working conditions," Energy, Elsevier, vol. 182(C), pages 280-295.
    3. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-166, February.
    4. Larch, Mario & Wanner, Joschka, 2017. "Carbon tariffs: An analysis of the trade, welfare, and emission effects," Journal of International Economics, Elsevier, vol. 109(C), pages 195-213.
    5. Mohamed Abdouli & Sami Hammami, 2017. "Economic growth, FDI inflows and their impact on the environment: an empirical study for the MENA countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(1), pages 121-146, January.
    6. Joseph S. Shapiro & Reed Walker, 2018. "Why Is Pollution from US Manufacturing Declining? The Roles of Environmental Regulation, Productivity, and Trade," American Economic Review, American Economic Association, vol. 108(12), pages 3814-3854, December.
    7. Fan, Haichao & Peng, Yuchao & Wang, Huanhuan & Xu, Zhiwei, 2021. "Greening through finance?," Journal of Development Economics, Elsevier, vol. 152(C).
    8. Ren, Shenggang & Yuan, Baolong & Ma, Xie & Chen, Xiaohong, 2014. "International trade, FDI (foreign direct investment) and embodied CO2 emissions: A case study of Chinas industrial sectors," China Economic Review, Elsevier, vol. 28(C), pages 123-134.
    9. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 2001. "Is Free Trade Good for the Environment?," American Economic Review, American Economic Association, vol. 91(4), pages 877-908, September.
    10. Wang, Hui & Zhang, Yunyun & Lin, Weifen & Wei, Wendong, 2023. "Transregional electricity transmission and carbon emissions: Evidence from ultra-high voltage transmission projects in China," Energy Economics, Elsevier, vol. 123(C).
    11. Nikos Tsakiris & Michael Michael & Panos Hatzipanayotou, 2014. "Asymmetric Tax Policy Responses in Large Economies With Cross-Border Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(4), pages 563-578, August.
    12. Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
    13. Steven Poelhekke & Frederick Ploeg, 2015. "Green Havens and Pollution Havens," The World Economy, Wiley Blackwell, vol. 38(7), pages 1159-1178, July.
    14. Francesca Sanna-Randaccio & Roberta Sestini, 2012. "The Impact of Unilateral Climate Policy with Endogenous Plant Location and Market Size Asymmetry," Review of International Economics, Wiley Blackwell, vol. 20(3), pages 580-599, August.
    15. Mahinda Siriwardana, 2015. "Australia’s new Free Trade Agreements with Japan and South Korea: Potential Economic and Environmental Impacts," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 30(4), pages 616-643.
    16. Siying Yang & Wenxuan Sun & Zhouyi Wu & Yang He, 2022. "Can the SO2 emission trading system promote urban emission reduction?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(4), pages 963-974, June.
    17. Yana Jin & Henrik Andersson & Shiqiu Zhang, 2016. "Air Pollution Control Policies in China: A Retrospective and Prospects," IJERPH, MDPI, vol. 13(12), pages 1-22, December.
    18. Dai, Mi & Maitra, Madhura & Yu, Miaojie, 2016. "Unexceptional exporter performance in China? The role of processing trade," Journal of Development Economics, Elsevier, vol. 121(C), pages 177-189.
    19. Forslid, Rikard & Okubo, Toshihiro & Ulltveit-Moe, Karen Helene, 2018. "Why are firms that export cleaner? International trade, abatement and environmental emissions," Journal of Environmental Economics and Management, Elsevier, vol. 91(C), pages 166-183.
    20. Liu, Li-Jing & Creutzig, Felix & Yao, Yun-Fei & Wei, Yi-Ming & Liang, Qiao-Mei, 2020. "Environmental and economic impacts of trade barriers: The example of China–US trade friction," Resource and Energy Economics, Elsevier, vol. 59(C).
    21. Qiaoxin Xie & Yu Zhang & Lei Chen, 2022. "Does green credit policy promote innovation: A case of China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2704-2714, October.
    22. Shi, Zhen & She, Zhiyu & Chiu, Yung-ho & Qin, Shijiong & Zhang, Lina, 2021. "Assessment and improvement analysis of economic production, water pollution, and sewage treatment efficiency in China," Socio-Economic Planning Sciences, Elsevier, vol. 74(C).
    23. Barrows, Geoffrey & Ollivier, Hélène, 2018. "Cleaner firms or cleaner products? How product mix shapes emission intensity from manufacturing," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 134-158.
    24. Wolfgang Keller, 2004. "International Technology Diffusion," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 752-782, September.
    25. Roy, Jayjit & Yasar, Mahmut, 2015. "Energy efficiency and exporting: Evidence from firm-level data," Energy Economics, Elsevier, vol. 52(PA), pages 127-135.
    26. Fu, Tong & Chang, Dongfeng & Miao, Chenglin, 2022. "Fuel regulation in a developing country: An interventional perspective," Energy Economics, Elsevier, vol. 113(C).
    27. Sunghoon Chung, 2012. "Environmental Regulation and the Pattern of Outward FDI: An Empirical Assessment of the Pollution Haven Hypothesis," Departmental Working Papers 1203, Southern Methodist University, Department of Economics.
    28. Wenchao Bu & Siyu Ren, 2023. "Government's green grip: Does industrial policy improve firm environmental performance?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(6), pages 3026-3042, September.
    29. Wenxiao Wang & Kairong Ma & Lingyu Kong, 2023. "Moving up the global value chain: Effects of water pollution control regulations in China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(8), pages 4262-4277, December.
    30. Jingbo Cui & Harvey Lapan & GianCarlo Moschini, 2016. "Productivity, Export, and Environmental Performance: Air Pollutants in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(2), pages 447-467.
    31. Fu, Tong & Jian, Ze, 2021. "Corruption pays off: How environmental regulations promote corporate innovation in a developing country," Ecological Economics, Elsevier, vol. 183(C).
    32. Lu, Jiangyong & Lu, Yi & Tao, Zhigang, 2010. "Exporting behavior of foreign affiliates: Theory and evidence," Journal of International Economics, Elsevier, vol. 81(2), pages 197-205, July.
    33. Xingyuan Wang, 2022. "Research on the impact mechanism of green finance on the green innovation performance of China's manufacturing industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2678-2703, October.
    34. Sinha, Apra & Kumar, Abhishek & Gopalakrishnan, Badri Narayanan, 2020. "Environmental Kuznets Curve and Pollution Haven Hypothesis," MPRA Paper 98930, University Library of Munich, Germany.
    35. Cherniwchan, Jevan, 2017. "Trade liberalization and the environment: Evidence from NAFTA and U.S. manufacturing," Journal of International Economics, Elsevier, vol. 105(C), pages 130-149.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Geng Huang & Xi Lin & Shuying Xu & Junyu Wang & Ling‐Yun He, 2025. "Trade policy uncertainty, export destination, and firm's pollution emissions: Analysis from theoretical perspective," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 46(4), pages 2181-2189, June.
    2. Xi Lin & Ling-Yun He, 2023. "The More the Merrier? Evidence from Firm-Level Exports and Environmental Performance in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(1), pages 125-172, January.
    3. 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.
    4. Huang, Geng & Lin, Xi & He, Ling-Yun, 2023. "Good for the environment? Foreign investment opening in service sector and firm's energy efficiency," Energy Economics, Elsevier, vol. 127(PA).
    5. Kwon, Ohyun & Zhao, Hao & Zhao, Min Qiang, 2023. "Global firms and emissions: Investigating the dual channels of emissions abatement," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).
    6. He, Ling-Yun & Huang, Geng, 2023. "Can importing improve the energy efficiency? Theory and evidence from Chinese industrial firms," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 451-469.
    7. He, Ling-Yun & Huang, Geng, 2022. "Are China's trade interests overestimated? Evidence from firms’ importing behavior and pollution emissions," China Economic Review, Elsevier, vol. 71(C).
    8. Kurz, Antonia, 2024. "Within-country leakage due to the exemption of small emitters from emissions pricing," Journal of Environmental Economics and Management, Elsevier, vol. 124(C).
    9. Hartmut Egger & Udo Kreickemeier & Philipp M. Richter, 2021. "Environmental Policy and Firm Selection in the Open Economy," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 8(4), pages 655-690.
    10. Akerman, Anders & Forslid, Rikard & Prane, Ossian, 2024. "Imports and the CO2 emissions of firms," Journal of International Economics, Elsevier, vol. 152(C).
    11. Huang, Geng & He, Ling-Yun & Lin, Xi, 2022. "Robot adoption and energy performance: Evidence from Chinese industrial firms," Energy Economics, Elsevier, vol. 107(C).
    12. Kexuan Zhou & Linhui Yu & Xinlin Jiang & Sanjay Kumar, 2023. "Trade policy uncertainty and pollution emissions of export enterprises—The case of China‐ASEAN free trade area," Review of International Economics, Wiley Blackwell, vol. 31(5), pages 1719-1750, November.
    13. Huang, Geng & Lin, Xi & He, Ling-Yun, 2025. "Global value chains participation and pollution emissions? Theory and evidence from Chinese enterprises," Economic Modelling, Elsevier, vol. 147(C).
    14. Huang, Geng & He, Ling-Yun & Lin, Xi, 2023. "Deterioration or improvement? Intermediate product import and enterprises' environmental performance," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 139-150.
    15. Barrows, Geoffrey & Ollivier, Hélène, 2021. "Foreign demand, developing country exports, and CO2 emissions: Firm-level evidence from India," Journal of Development Economics, Elsevier, vol. 149(C).
    16. Richter, Philipp M. & Schiersch, Alexander, 2017. "CO2 emission intensity and exporting: Evidence from firm-level data," European Economic Review, Elsevier, vol. 98(C), pages 373-391.
    17. Geoffrey Barrows & Helene Ollivier, 2018. "Foreign Demand and Greenhouse Gas Emissions: Empirical Evidence with Implications for Leakage," Working Papers 2018.16, FAERE - French Association of Environmental and Resource Economists.
    18. Liu, Mengdi & Zhang, Bing & Liao, Xianchun, 2022. "Can trade liberalization promote green production? Evidence from China's manufacturing enterprises," Journal of Asian Economics, Elsevier, vol. 79(C).
    19. Gaoju Yang & Yuexing Xie & Xianhai Huang & Hangyu Chen, 2024. "Exporters' environmental premium in a developing country: Firm‐level evidence from China," Review of International Economics, Wiley Blackwell, vol. 32(3), pages 778-813, August.
    20. Qirjo, Dhimitri & Pascalau, Razvan & Krichevskiy, Dmitriy, 2019. "CETA and Air Pollution," MPRA Paper 95608, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:46:y:2025:i:4:p:2190-2205. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/7976 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.