Construction of the Pilot Free Trade Zone and Chinese Green Total Factor Energy Efficiency

Abstract

In the context of China’s “double carbon” target, paying attention to regional green total factor energy efficiency (GTFEE) is crucial for ensuring a fundamental guarantee for China’s free trade zones for the promotion of sustainable development in China’s free trade zones. However, the existing literature lacks focus on the environmental effects of these zones. This study takes advantage of the pilot free trade zone (PFTZ) implemented in 2013 as a natural experiment, utilizing panel data from 2009 to 2020 for Chinese prefecture-level cities. It adopted a progressive difference-in-difference model to assess the effect of the PFTZ on GTFEE. The findings demonstrate a remarkable improvement in GTFEE due to the PFTZ, which remains robust even after conducting robustness checks, including the parallel trend test. The PFTZ achieves this improvement by facilitating industrial structure upgrading and promoting green technology innovation. The positive influence of the PFTZ on GTFEE is particularly prominent in coastal cities and non-resource-based cities. This study contributes to the understanding of the environmental effects of free trade zones, providing a direct response to the key question of whether the free trade zone policy can effectively support high-quality economic development in the new era. Moreover, it offers useful policy implications for advancing further openness, winning the battle against pollution, and boosting high-quality economic development.