Impact of environmental regulations on the industrial eco-efficiency in China—based on the strong porter hypothesis and the weak porter hypothesis

As an important indicator of sustainable development, industrial eco-efficiency (IEE) has aroused growing attention from governments all over the world including China, in recent decades. The Chinese government has introduced numerous environmental regulations; however, the environmental pollution issue does not appear to have been solved. Moreover, although several earlier studies have shown that environmental regulations may promote innovation, there is no consensus on their ultimate effects on IEE. Therefore, this study took a critical look at the connection between environmental regulations and IEE in 36 Chinese sub-sectors from 2009 to 2018. Based on the weak Porter hypothesis (weak PH) and strong Porter hypothesis (strong PH), this paper constructed two panel regression models and conducted group analysis by pollution intensity to check the relationships among environmental regulations, technological innovation, and IEE. It was found that environmental regulations can improve technological innovation and IEE, but these impacts vary across different pollution groups. Specifically, environmental regulations have a U-shaped or inverted U-shaped relationship with technological innovation and IEE. Of the 36 sub-sectors, 26 prove the existence of the Weak PH while 10 verify the Strong PH, indicating that environmental regulations generally advocate technological innovation for most sub-sectors but only promote IEE in a few sub-sectors at present. Finally, differentiated policy implications for environmental regulations and technological innovation are provided for decision-makers.

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