Impact of subsidies on innovations of environmental protection and circular economy in China

Xiaofeng Xu; Wenyan Zhang; Tao Wang; Yi Xu; Huanzheng Du

doi:10.1016/j.jenvman.2021.112385

Impact of subsidies on innovations of environmental protection and circular economy in China

J Environ Manage. 2021 Jul 1:289:112385. doi: 10.1016/j.jenvman.2021.112385. Epub 2021 Apr 5.

Authors

Xiaofeng Xu¹, Wenyan Zhang², Tao Wang³, Yi Xu⁴, Huanzheng Du⁵

Affiliations

¹ International School of Law and Finance, East China University of Political Science and Law, Shanghai, 200042, PR China. Electronic address: xxfwnx@hotmail.com.
² International School of Law and Finance, East China University of Political Science and Law, Shanghai, 200042, PR China. Electronic address: 2898@ecupl.edu.cn.
³ Institute for Advanced Study, Tongji University, Shanghai, 200092, China; UNEP-Tongji Institute of Environment for Sustainable Development, Tongji University, Shanghai, 200092, China; Key Laboratory of Cities' Mitigation and Adaptation to Climate Change in Shanghai, Shanghai, 200092, China. Electronic address: a.t.wang@foxmail.com.
⁴ School of Economics and Management, Tongji University, Shanghai, 200092, China. Electronic address: 1610321@tongji.edu.cn.
⁵ The Circular Economy Research Institute, Tongji University, Shanghai, 200092, China. Electronic address: duhuanzheng@tongji.edu.cn.

PMID: 33831762
DOI: 10.1016/j.jenvman.2021.112385

Abstract

Technological innovations in China's energy conservation and environmental protection industry (EEPI) are capital-intensive and useful to mitigate environmental externality, thus they need policy support and government subsidies (GSs) at the emerging stage. Nevertheless, research is limited on the influence of GSs onto innovation performance of China's EEPI, with particular to the effect of GSs from enterprise level. This study investigated 62 listed energy conservation and environmental protection enterprises (EEPEs) in China's market in 2013-2018. The innovation performance of these enterprises was quantitatively evaluated, and multivariate regression models were devised to examine GSs and other potential drivers that might influence the innovation. Key findings include (1) EEPEs' investment in R&D and protection of intellectual properties played a positive intermediary and regulatory role between GSs and enterprise innovation performance (correlation at the significance level of 0.05 (p = 0.045; p = 0.036)). (2) There is a significant positive correlation at the significance level of 0.05 (p = 0.011), which indicates that the strongest positive relation between GSs and innovation performance was identified in an environment of low external regulation and high internal regulation, and the effects were more significant for non-state-owned EEPEs(correlation at the significance level of 0.05 (p = 0.018)). (3) The promotion of GSs to innovation was found less effective in the three most developed regions in China, i.e., the Yangtze River Delta, the Pearl River Delta, and the Beijing-Tianjin-Hebei Area. Nonetheless it was more effective for enterprise engaged in the circular economy and resource recycling (correlation at a significant level of 0.05 (P = 0.048)). These findings may shed lights on decision making of green technology development for environmental conservation and circular economy.

Keywords: Circular economy; Energy conservation and environmental protection; Enterprise innovation performance; Government subsidies; Intermediary effect; Recycling industry.

MeSH terms

Beijing
China
Conservation of Natural Resources*
Economic Development*
Industry