Impact of Environmental Regulation on Firm’s Green Trade Development: Perspective from Trade Scale, Technology, and Diversification of China

Green trade is increasingly central to reconciling trade growth with climate goals and to driving industrial upgrading in major trading economies. The essential of green trade promotion depends not only on trade scale but also on the technological sophistication and trade diversification of green products. Environmental regulation is a primary policy instrument guiding firms toward greener production and trade. This study investigates whether strengthening environmental regulation can promote green trade from the perspectives of scale, technological structure, and diversification. To this end, we first construct a comprehensive green product list and then calculate firm-level and provincial-level green trade indicators using detailed product-level customs transaction data from 2000 to 2020. These trade indicators are further matched with enterprise operating and financial data to build an integrated panel dataset, upon which fixed-effects regression models are employed to quantify the effects of environmental regulation on green trade. Our empirical results show that enhanced environmental regulation can promote the expansion of green export scale, with the effects amplifying as product technology levels advance. Regarding diversification, the promoting effect of environmental regulation on green imports surpasses that on exports. Furthermore, this study highlights that the combined effect of various types of environmental regulations can better promote the comprehensive development of green trade. Strengthened environmental regulation can enlarge the green export scale of private-owned, foreign-invested, and small-scale enterprises. These findings provide policy implications for combining differentiated environmental regulations with green trade incentives to promote green trade development.