Environmental Technical Standardsand the Green Transition of China’sManufacturing Industry

Abstract

Distinct from the existing literature conforming to the Porter hypothesis whichemphasizes the technological innovation mechanism, this paper examines the mechanismof technological transformation through which environmental technical standards influencethe manufacturing industry in reducing emissions and improving efficiency (i.e. greentransition). Furthermore, drawing upon enterprise samples from the databases of ChineseIndustrial Enterprises and Chinese Industrial Pollution Sources from Major MonitoredEnterprises, it empirically validates the results of the theoretical analysis. Overall, ourresearch reveals that environmental technical standards can propel manufacturingenterprises to reduce pollution and increase productivity by following an incrementalpath of technological transformation, thereby achieving a green transition. Moreover,environmental technical standards indirectly promote green technology innovation in theupstream equipment manufacturing enterprises. Heterogeneity analysis further showsthat environmental technical standards have a stronger effect of green transition on thosecompanies with higher pollution emission intensity, lower productivity, slower capitalrenewal and stronger financing capacity prior to implementing the environmental policies.