Non‐Linear Effects of Industrial Relocation on Regional Development: Green Growth or Pollution Leakage?

ABSTRACT Optimizing resources allocation at both time and space dimensions, green growth driven by industrial relocation can effectively prevent pollution leakage. Based on a rich Chinese province‐industrial panel data during 2008–2022, this article employs a spatial Durbin model to capture the non‐linear effects of industrial relocation on environmental pollution and green growth. After a set of robustness tests, results confirm significant spatial spillover effects, the environmental effect of industrial relocation shows a significant U‐shaped curve, but the economic effect is an inverted U‐shaped curve. Industrial relocation regions indeed achieve de‐pollution and move toward high‐end production, and the overall pollution leakage is attributed to the relocation of resource‐intensive industries. The spatial boundary tests show that pollution leakage can spread over a geographical distance of 1250 km, while the green growth has only radiated to regions with similar economic strength. Besides, investment structure, technological improvement and employment creation are significant transmission pathways, and green growth is main induced by employment creation effect. This article provides important policy implications for orderly industrial relocation and green development.