Does environmental regulation policy help improve green production performance? Evidence from China's industry

Environmental regulation (ER) policy is an effective means to improve green production performance (GPP), but how ER policy will affect China's GPP remains to be studied. Therefore, with the panel data of 38 industrial sectors in China during 2004-2015, we employ the continuous difference in difference method and system generalised method of moment method to estimate the impact of ER policy on GPP in the heavily polluting sectors of China. The empirical results show that first, the implementation of ER policy does not significantly improve GPP of heavily polluting sectors during the sample period. Among them, the external technological progress and export learning effect are important factors that hinder their GPP. Second, ER has no lag effect on GPP of 38 industrial sectors, and the increase in research and development investment does not significantly improve GPP. Finally, foreign direct investment has promoted GPP in China's industrial sectors to some extent.