Analysis of Coordinated Development of Energy and Environment in China’s Manufacturing Industry under Environmental Regulation: A Comparative Study of Sub-Industries

Abstract

In order to explore the impact of environmental regulation on the coordinated development of energy and the environment with the background of governance transition, we propose a three-stage integrated approach and use the panel data of China’s manufacturing industry 27 sub-sectors during the period of 2006–2015. In the first stage, according to the environmental pollution intensity, the manufacturing industry is divided into heavily polluting industry, moderately polluting industry, and lightly polluting industry. The second stage is employed the slacks-based measure (SBM)-undesirable method to study the sub-industries’ green energy-environmental efficiency under different environmental pollution intensities. Besides, the dynamic changes of technical innovation and efficiency among different industries are analyzed through the Malmquist productivity index. For the purpose of investigating the transmission mechanism of the Porter’s hypothesis and exploring the compound effects of environmental regulation and governance transition on green development, in the third stage, we use the panel data analysis to conduct more in-depth research on the relationship between environmental regulation, governance transition, and technical innovation. Results show that the highest average green energy-environmental efficiency is lightly polluting industry, which is 0.52, followed by the heavily polluting industry at 0.40, and the lowest is the moderately polluting industry, which is 0.32. By decomposing total factor productivity, heavily polluting industry is at the forefront of technical innovation. Panel data analysis results indicate that investment in research and development and governance transition could promote the growth of total factor productivity for manufacturing.