The environmental effect of trade liberalization: Evidence from China's manufacturing firms

Journal Article (Journal Article)

While prior literature on trade liberalisation and the environment has mostly focused on the macroeconomic ramifications, this study explores at the firm level whether and how changes of trade barriers brought about by China's accession to the WTO may impact on its manufacturing firms’ environmental performance. Adopting a difference-in-differences (DID) methodology, we document the effects of tariff reductions on improving firm-level SO2 emission intensity, and the key corporate strategic decisions responsible for delivering the observed results, with robustness tests covering other major pollutants. In response to trade liberalisation, firms are found to increase labour resources for environmental protection and to improve their production processes to reduce emission intensity. This study contributes to the literature by investigating at the level of the operating firm how output and input tariff reductions may impact on environmental performance and uncovering for the first time the specific actions responsible for the results.

Full Text

Duke Authors

Cited Authors

  • Cui, J; Tam, OK; Wang, B; Zhang, Y

Published Date

  • December 1, 2020

Published In

Volume / Issue

  • 43 / 12

Start / End Page

  • 3357 - 3383

Electronic International Standard Serial Number (EISSN)

  • 1467-9701

International Standard Serial Number (ISSN)

  • 0378-5920

Digital Object Identifier (DOI)

  • 10.1111/twec.13005

Citation Source

  • Scopus