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Regional competition, rural pollution haven and environmental injustice in China

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  • Zhang, Cong
  • Tao, Ran
  • Yue, Zihang
  • Su, Fubing

Abstract

Under intense fiscal pressure, China's local governments raced against each other to offer business-friendly policies to mobile industries. Lax environmental enforcement was widely adopted across the country and many poor regions became havens for polluting factories. We argue that this adverse effect went deeper than the interjurisdictional competition argument. Within each jurisdiction, urban and rural communities engaged in a similar rivalry. Local governments, facing stronger societal environmental pressure from urban communities, prioritized urban environment and allocated fewer administrative resources to rural environment enforcement. As a result, polluting enterprises found refuge in the rural part of these jurisdictions. We merge a national firm registry database with a national survey of polluting enterprises firms and find strong evidence supporting this hypothesis. Our research extends the scope of the pollution haven hypothesis from an inter-jurisdictional dimension to the urban-rural divide, a source of environmental injustice that is understudied in the literature. Our study of firm location choices also complements current researches on Chinese rural pollution by highlighting the political and economic causes of pollution.

Suggested Citation

  • Zhang, Cong & Tao, Ran & Yue, Zihang & Su, Fubing, 2023. "Regional competition, rural pollution haven and environmental injustice in China," Ecological Economics, Elsevier, vol. 204(PA).
    • Handle: RePEc:eee:ecolec:v:204:y:2023:i:pa:s0921800922003305
    DOI: 10.1016/j.ecolecon.2022.107669
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    7. Xu Ou & Haiwei Jiang, 2023. "The Impact of Environmental Regulation on Firm Performance: Evidence from the Pulp and Paper Industry in China," IJERPH, MDPI, vol. 20(4), pages 1-18, February.
    8. Xie, Yu & Wu, Desheng & Li, Xiaoyan & Tian, Suhua, 2023. "How does environmental regulation affect productivity? The role of corporate compliance strategies," Economic Modelling, Elsevier, vol. 126(C).
    9. Marcos Sanso-Navarro & Guillermo Peña, 2023. "Long-run effects of floods at municipality level in Spain," French Stata Users' Group Meetings 2023 29, Stata Users Group.
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