Import competition and pollution abatement: Firm-level evidence from China

The relationship between international trade and environmental has garnered considerable attention. However, research on developing economies' experiences remains scant. This paper investigates the impact of import competition on pollution emissions of firms in China, the largest developing country, utilizing micro-firm survey data from 2000 to 2012. Our study reveals that import competition significantly curtails firms' SO2 emission intensity. The employment of DID and 2SLS strategies corroborates the robustness of our results. Furthermore, we find that import competition bolsters firms' technical efficiency, leads to alterations in product mix and industry features, and improved pollution treatment efficiency, culminating in diminished pollution intensity. However, there is no evidence that import competition has encouraged firms to prioritize green innovation and the use of clean energy. We also introduce a novel approach to identify 'pollution leakage effects'. When this effect is taken into account, the pollution abatement effect of import competition still exists.