Two essays on pollution, trade and industries in China

  • Jie BAI

Student thesis: PhD Thesis (Lingnan)


The relationship between environment and human economic activities is intricately intertwined. This thesis delves into the investigation of the causal effect of pollution on exports and, in turn, examines the impacts of industrial intelligence on the environment. It is organized into two chapters. The first chapter of the thesis studies whether and how air pollution affects firms’ exports based on Chinese data (2000-2007). The literature on the correlation between trade and environment is vast, but studies almost exclusively focus on the causal effects of trade on environment. This study examines the reverse effects. In the analysis, we use PM2.5 concentrations as a proxy for air pollution and employing thermal inversion as an instrumental variable. We find that a 1% increase in PM2.5 leads to a 0.79% reduction in firms’exports. This adverse effect of air pollution on exports is mainly attributed to the intensive margins as opposed to the extensive margins. The result is robust to various specifications of model and measurement. Our mechanism analysis identifies two channels: (1) air pollution decreases exports by reducing firm productivity, and (2) air pollution invites stringent environmental regulations, which reduces exports as firms need to increase abatement costs or reduce production to meet the environment standards. The second chapter of the thesis studies the complex relationship between industrial intelligence, energy consumption, and environmental impact. The shift towards intelligent production is gradually transforming the global production landscape, with significant impacts on energy consumption and the environment. China, a major energy consumer and top emitter of pollutants, is rapidly transitioning towards intelligent manufacturing. The effects of this shift on energy consumption and the environment will play a crucial role in determining the future of global energy reserves, the environment, and sustainable development. Using city-level industrial intelligence indicators, this study reveals that industrial intelligence increases electricity consumption but reduces sulfur dioxide (SO2) emissions. Interestingly, the SO2 reduction is more pronounced in regions that rely on electricity imports since the potential pollution from the increased electricity consumption could be exported to the other regions due to the geographic separation between electricity consumption and production in China. Over the years, the advancement of industrial intelligence intensifies the emission-burden electricity shifting.
Date of Award8 Aug 2023
Original languageEnglish
Awarding Institution
  • Lingnan University
SupervisorDongxiao Larry QIU (Supervisor) & Yonglin Laura WANG (Co-supervisor)

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