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<p>Simultaneously enhancing export quality and environmental sustainability is imperative for China’s quality-driven trade transition. Leveraging China’s 1994 Environmental Vertical Reform (EVR) as a quasi-exogenous policy shock, this study examines whether and how environmental regulation contributes to export upgrading. Employing staggered Difference-in-Differences (DID) design with matched firm-product-transaction data from the Chinese Industrial Enterprise and Customs Databases, we identify the causal effects of EVR on export quality dynamics. Our results reveal that EVR significantly increases export product quality by 0.7%. The improvement is driven by both city-level mechanisms—industrial structure upgrading and factor safeguard—and firm-level channels including resource reallocation and innovation enhancement. Further heterogeneity analysis indicates stronger effects for state-owned enterprises, firms in politically constrained regions, and those participating in general trade. Additionally, EVR produces positive spillover effects by lowering sulfur dioxide emissions in neighboring non-pilot cities and promoting knowledge transfer to less-developed markets through experience gained in exporting to developed countries. These findings validate the dual efficacy of environmental regulation in enhancing ecological governance and trade competitiveness, empirically substantiating the “quality spillover effect” and offering policy blueprints for emerging economies navigating environmental-GVC tradeoffs.</p>

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Can environmental system reform enhance firms’ export product quality? Evidence from the environmental vertical reform in China’s prefecture-level cities

  • 期刊论文

  • 发表日期：

    2025年9月4日

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  • Yan Jiang,
  • Long Tang,
  • Xiaotian Wei,
  • Cui Huang

摘要

Simultaneously enhancing export quality and environmental sustainability is imperative for China’s quality-driven trade transition. Leveraging China’s 1994 Environmental Vertical Reform (EVR) as a quasi-exogenous policy shock, this study examines whether and how environmental regulation contributes to export upgrading. Employing staggered Difference-in-Differences (DID) design with matched firm-product-transaction data from the Chinese Industrial Enterprise and Customs Databases, we identify the causal effects of EVR on export quality dynamics. Our results reveal that EVR significantly increases export product quality by 0.7%. The improvement is driven by both city-level mechanisms—industrial structure upgrading and factor safeguard—and firm-level channels including resource reallocation and innovation enhancement. Further heterogeneity analysis indicates stronger effects for state-owned enterprises, firms in politically constrained regions, and those participating in general trade. Additionally, EVR produces positive spillover effects by lowering sulfur dioxide emissions in neighboring non-pilot cities and promoting knowledge transfer to less-developed markets through experience gained in exporting to developed countries. These findings validate the dual efficacy of environmental regulation in enhancing ecological governance and trade competitiveness, empirically substantiating the “quality spillover effect” and offering policy blueprints for emerging economies navigating environmental-GVC tradeoffs.