International Economic Integration and Environmental Protection: The Case of China.

This paper tests propositions advanced in previous theoretical literature about the impact of international economic integration via trade and investment on environmental protection with a case study of China. We hypothesize that instead of leading to additional environmental degradation, increased openness to trade and foreign investment results in an overall improvement in environmental quality by acting as a transmission belt for superior regulatory standards and environmental technology from China’s key export markets. Additionally, pressure for enhanced environmental regulation and product standards from principal developed-world importers of Chinese goods may induce Chinese firms to self-regulate rather than attempting to reduce the cost of their exports by lowering environmental standards. Statistical analysis of the variation in environmental performance across China’s regions from 1996 to 2004 lends support to this hypothesis, indicating that rather than leading regions to engage in a “race to the bottom” with the lowering of environmental standards, increased trade and investment encourages more stringent policy enforcement and compliance. [ABSTRACT FROM AUTHOR]