Is the "pollution haven hypothesis" valid for China's carbon trading system? A re-examination based on inter-provincial carbon emission transfer.

In recent years, China had released various environmental regulations in order to respond climate change and corresponding environmental issues. However, due to imbalanced economic development and industrial structure, different Chinese regions had different enforcement levels on environmental regulations, which led to the regional transfer of pollution-intensive industries. To study the regional disparities on carbon emission transfer, this paper used the propensity score matching-difference in differences method (hereinafter abbreviated as "PSM-DID") to evaluate the mechanism between carbon trading pilot policies and the transfer of pollution-intensive industries. Panel data on 30 Chinese provinces were used to test the validity of the "pollution haven hypothesis," covering the period of 2010-2018. The empirical results showed that under the constraints of established environmental regulation, the pilot policy promoted the transfer of pollution-intensive industries to a certain extent and verified the "pollution haven hypothesis"; the proportion of the secondary sector and energy industry in the pilot areas had been reduced after the pilot policy; on the contrary, the technical level and the economic development level of the pilot provinces and cities had been further improved.