Journal Screenshot

International Journal of Academic Research in Business and Social Sciences

Open Access Journal

ISSN: 2222-6990

The Evolution of Chinese Environmental Regulation and its Green Innovation Effects: A Review and Prospect

Yang Liu, Roshazlizawati Mohd Nor, Ma Kalthum Ishak, Xuan Li

http://dx.doi.org/10.6007/IJARBSS/v14-i1/20531

Open access

This study reviews the evolution of China's environmental regulations and provides a literature review of the effect of environmental regulation on green innovation in China. This study provides a three-stage summary of the evolution of China's environmental regulation framework: the first stage is the initial and exploratory period of environmental legislation; the second stage is the formulation and implementation of environmental policies; and the last stage is the strengthening of multidimensional environmental regulation framework. By reviewing the evolution of China's environmental regulation framework, as well as reviewing past literature, this study finds that (1) China's environmental regulation has developed into a multidimensional framework that incorporates government command and control, market incentives, and public participation, exhibiting typical Chinese characteristics. (2) Environmental regulations are a primary driver of green innovation in China, but the findings of empirical studies are controversial because past studies have focused on different policies, regions, and industries. (3) Future research could examine the optimal combination of green innovation-oriented environmental regulation policies, the multidimensional synergy of environmental regulation framework, and the impact of policy and regional heterogeneity on enterprise behavior.

Bao, M. (2006). The evolution of environmental policy and its impact in the People’s Republic of China. Conservation and Society, 4(1), 36–54. http://www.jstor.org/stable/26396647
Bi Q., & Yu L. (2019). Environmental tax and enterprise technological innovation: Promotion or suppression? Science Research Management, 40(12), 116–125.
https://doi.org/10.19571/j.cnki.1000-2995.2019.12.012 (Chinese)
Blackman, A., Lahiri, B., Pizer, W., Planter, R. M., & Piña, M. C. (2010). Voluntary environmental regulation in developing countries: Mexico’s Clean Industry Program. Journal of Environmental Economics and Management, 60(3), 182–192.
https://doi.org/10.1016/j.jeem.2010.05.006
Cai W., & Li Q. (2019). Dual effect of environmental regulation on enterprise’s eco-technology innovation. Science Research Management, 40(10), 87–95.
https://doi.org/10.19571/j.cnki.1000-2995.2019.10.008 (Chinese)
Chen, B., Gegentana, & Wang, Y. (2023). The impact of environmental regulations on enterprise pollution emission from the perspective of “overseeing the government”. Sustainability, 15(14), Article 14. https://doi.org/10.3390/su151411311
Chen, Y. P. (Vincent), Zhuo, Z., Huang, Z., & Li, W. (2022). Environmental regulation and ESG of SMEs in China: Porter hypothesis re-tested. Science of The Total Environment, 850, 157967. https://doi.org/10.1016/j.scitotenv.2022.157967
Dong, Z., He, Y., Wang, H., & Wang, L. (2020). Is there a ripple effect in environmental regulation in China? – Evidence from the local-neighborhood green technology innovation perspective. Ecological Indicators, 118, 106773.
https://doi.org/10.1016/j.ecolind.2020.106773
Feng, Z., & Chen, W. (2018). Environmental regulation, green innovation, and industrial green development: An empirical analysis based on the Spatial Durbin Model. Sustainability, 10(1), 223. https://doi.org/10.3390/su10010223
Guo, L., Tang, L., Cheng, X., & Li, H. (2023). Exploring the role of fintech development in reducing firm pollution discharges: Evidence from Chinese industrial firms. Journal of Cleaner Production, 425, 138833. https://doi.org/10.1016/j.jclepro.2023.138833
Guo, M., Wang, H., & Kuai, Y. (2023). Environmental regulation and green innovation: Evidence from heavily polluting firms in China. Finance Research Letters, 53, 103624. https://doi.org/10.1016/j.frl.2022.103624
Guo, Y., Xia, X., Zhang, S., & Zhang, D. (2018). Environmental regulation, government r&d funding and green technology innovation: Evidence from China provincial data. Sustainability, 10(4), 940. https://doi.org/10.3390/su10040940
Hsu, C.-C., Quang-Thanh, N., Chien, F., Li, L., & Mohsin, M. (2021). Evaluating green innovation and performance of financial development: Mediating concerns of environmental regulation. Environmental Science and Pollution Research, 28(40), 57386–57397. https://doi.org/10.1007/s11356-021-14499-w
Jiang, Y., Wu, Q., Brenya, R., & Wang, K. (2022). Environmental decentralization, environmental regulation, and green technology innovation: Evidence based on China. Environmental Science and Pollution Research. https://doi.org/10.1007/s11356-022-23935-4
Kuang C., & Lu J. (2019). Research on the influence of environmental regulation on green technology innovation———evidence from Hunan province. Economic Survey, 36(2), 126–132. https://doi.org/10.15931/j.cnki.1006-1096.20190116.003 (Chinese)
Li, Q., & Xiao, Z. (2020). Heterogeneous Environmental regulation tools and green innovation incentives: Evidence from green patents of listed companies. Economic Research Journal, 55(9), 192–208. https://doi.org/doi:CNKI:SUN:JJYJ.0.2020-09-013 (Chinese)
Liang, P., Xie, S., Qi, F., Huang, Y., & Wu, X. (2023). Environmental Regulation and green technology innovation under the carbon neutrality goal: Dual regulation of human capital and industrial structure. Sustainability, 15(3), Article 3. https://doi.org/10.3390/su15032001
Lin, B., & Xie, J. (2023). Does environmental regulation promote industrial structure optimization in China? A perspective of technical and capital barriers. Environmental Impact Assessment Review, 98, 106971. https://doi.org/10.1016/j.eiar.2022.106971
Liu, Q., Zhu, Y., Yang, W., & Wang, X. (2022). Research on the impact of environmental regulation on green technology innovation from the perspective of regional differences: A Quasi-Natural Experiment Based on China’s New Environmental Protection Law. Sustainability, 14(3), 1714. https://doi.org/10.3390/su14031714
Luo, Y., Salman, M., & Lu, Z. (2021). Heterogeneous impacts of environmental regulations and foreign direct investment on green innovation across different regions in China. Science of The Total Environment, 759, 143744.
https://doi.org/10.1016/j.scitotenv.2020.143744
Meng F., & Han B. (2017). Research on impact of government environmental regulation on enterprises’ low carbon technology innovation behavior. Frontiers of Science and Technology of Engineering Management, 36(1), 74–80.
https://doi.org/doi:CNKI:SUN:YUCE.0.2017-01-012 (Chinese)
Peng X., & Li B. (2016). On green industrial transformation in Chinaunder different types of environmental regulation. Journal of Finance and Economics, 42(7), 134–144. https://doi.org/10.16538/j.cnki.jfe.2016.07.012 (Chinese)
Petroni, G., Bigliardi, B., & Galati, F. (2019). Rethinking the Porter hypothesis: The underappreciated importance of value appropriation and pollution intensity. Review of Policy Research, 36(1), 121–140. https://doi.org/10.1111/ropr.12317
Porter, M. E., & Linde, C. van der. (1995). Toward a new conception of the environment-competitiveness relationship. Journal of Economic Perspectives, 9(4), 97–118. https://doi.org/10.1257/jep.9.4.97
Shen, N., Liao, H., Deng, R., & Wang, Q. (2019). Different types of environmental regulations and the heterogeneous influence on the environmental total factor productivity: Empirical analysis of China’s industry. Journal of Cleaner Production, 211, 171–184. https://doi.org/10.1016/j.jclepro.2018.11.170
Tang, K., Qiu, Y., & Zhou, D. (2020). Does command-and-control regulation promote green innovation performance? Evidence from China’s industrial enterprises. Science of The Total Environment, 712, 136362. https://doi.org/10.1016/j.scitotenv.2019.136362
Tao, F., Zhao, J., & Zhou, H. (2021). Does environmental regulation improve the quantity and quality of green innovation——evidence from the target responsibility system of environmental protection. China Industrial Economics, 2021(02), 136–154. https://doi.org/doi:10.19581/j.cnki.ciejournal.2021.02.016 (Chinese)
Tao R., Lu X., Su F., & Wang H. (2009). China’s transition and development model under evolving regional competition patterns. Economic Research Journal, 44(7), 21–33. https://doi.org/doi:CNKI:SUN:JJYJ.0.2009-07-005 (Chinese)
Ullah, S., Ozturk, I., Majeed, M. T., & Ahmad, W. (2021). Do technological innovations have symmetric or asymmetric effects on environmental quality? Evidence from Pakistan. Journal of Cleaner Production, 316, 128239.
https://doi.org/10.1016/j.jclepro.2021.128239
Wang, X., Hao, S., & Zhang, J. (2020). New environmental protection law and corporate green innovation: Forcing or forcing out? China Population,Resources and Environment, 30(7), 107–117. (Chinese)
Wu, J., & Chang, I.-S. (2020). Evolution of China’s environmental policy. In J. Wu & I.-S. Chang (Eds.), Environmental Management in China: Policies and Institutions (pp. 7–15). Springer. https://doi.org/10.1007/978-981-15-4894-9_2
Xu, X., Hou, P., Liu, Y., Xu, X., Hou, P., & Liu, Y. (2022). The impact of heterogeneous environmental regulations on the technology innovation of urban green energy: A study based on the panel threshold model. Green Finance, 4(1), Article GF-04-01-006. https://doi.org/10.3934/GF.2022006
Zhang, C., & Cheng, J. (2022). Environmental regulation and corporate cash holdings: evidence from China’s new environmental protection law. Frontiers in Environmental Science, 10. https://www.frontiersin.org/articles/10.3389/fenvs.2022.835301
Zhang, Y., & Li, X. (2022). Environmental regulation and high-quality economic growth: Quasi-natural experimental evidence from China. Environmental Science and Pollution Research, 29(56), 85389–85401. https://doi.org/10.1007/s11356-022-21832-4
Zheng, Z., & Xu, Y. (2022). Environmental regulation, family involvement and green innovation efficiency—based on sew theory framework. Sustainability, 14(20), Article 20. https://doi.org/10.3390/su142013258

(Liu et al., 2024)
Liu, Y., Nor, R. M., Ishak, M. K., & Li, X. (2024). The Evolution of Chinese Environmental Regulation and its Green Innovation Effects: A Review and Prospect. International Journal of Academic Research in Business and Social Sciences, 14(1), 1172–1181.