Influence Of Chinese Environmental Regulation On Environmental Technology Innovation

In order to suppress the trend of environment deterioration and achieve the goal of sustainable economic development, Chinese government implements a series of environmental regulation measures such as sewage charge systems, right to license,environmental taxes and financial subsidies, and continuously increase the intensity of environmental pollution control dimensions. Has environmental regulation achieved expected effect? Can environmental technology innovation of enterprises elevate environmental quality? The paper focuses on studying environmental regulation’s impact on environmental technology innovation and provides a valuable advice for the government to make environmental policy, to maximize the incentive effect of environmental regulation on environmental technology innovation through policy adjustment.The indicators discharge standard-meeting rate of "three wastes" and pollution treatment efficiency, comprehensive utilization rate of "three wastes" and comprehensive utilization rate of solid waste are selected to obtain a comprehensive index by the principal component analysis with dimensional reduction to reflect environmental technology innovation level. The proportion of environmental pollution control equipment investment in GDP is used as an indicator of command-and-control environmental regulation while pollutant discharge fee of real GDP per capita as an indicator of market incentive-based regulation. In addition,considering that it may be not necessarily a simple linear relationship between environmental regulation and environmental technology innovation, the square of two regulatory indicators are further introduced to latent examine non-linear effect.Regression analysis is performed to verify the impact of imbalances of regional development in 30 provinces and cities of China according to east, middle and west regions.The results indicate an “inverted-U” curve between environmental regulation intensity and environmental technology innovation level, i.e. environmental technology innovation first attains to some level with the increase in environmentalregulation intensity, but the development of environmental technology innovation is inhibited when environmental regulation achieves certain intensity. The promotion effect of market incentive-based environmental regulation is more prominent than the command-and-control environmental regulation on environmental technology innovation. The promotion of regional economic development level favors and foreign direct investment generates positive correlation with the level of environmental technology innovation. R & D investment to the central and western regions has also a significant effect. From the Midwest and Eastern regression results the role of command-and-control environmental regulation is more evident in middle and west regions owing to the characteristics of industries.