The Environmental Effects of International Trade in China: Measuring the Mediating Effects of Technology Spillovers of Import Trade on Industrial Air Pollution

Abstract

China is in a strategic phase of an industrial green transformation. Industrial air pollution is a key environmental target for governance. Because import trade is a core channel through which advanced environmental protection technology is absorbed, the question of whether technology spillovers brought about by import trade can reduce industrial air pollution emissions is a topic worth exploring. This paper uses a generalized spatial two-stage least-square (GS2SLS) model to explore the impact of import trade technology spillovers on industrial air pollution emission intensities using panel data from 30 provinces and cities between 2000 and 2017. Economic scale, industrial structure, and technological innovation are used as intermediary variables to test whether they play mediating effects. The results show that: (1) capital and intermediate goods technology spillovers directly reduce industrial air pollution emission intensity and (2) import trade technology spillovers indirectly reduce emission intensities by expanding economic scale, optimizing industrial structure, and enhancing technological innovation through mediating variables. Furthermore, industrial structure optimization and technological innovation have the largest mediating effects on industrial SO2, while economic expansion has the most significant mediating effect on industrial smoke and dust. The mediating effects of technology spillovers from intermediate goods exceed those of capital technology spillovers. Finally, industrial air pollution emission intensity demonstrates both spatial agglomeration and time lag effects. Environmental regulations and energy structure are shown to increase industrial air pollution emissions, while urbanization and foreign direct investment reduce industrial air pollution. Based upon these research results, some pertinent policy implications are proposed for China.