Economic growth target and environmental regulation intensity: evidence from 284 cities in China

Management of economic growth targets is a universal measure employed by worldwide governments for macroeconomic regulation. This paper aims to empirically investigate the impact of economic growth targets set by governments of prefecture-level cities on the environmental regulation intensity. We extracted panel data on annual economic growth targets and environmental regulation indicators from the government work reports (2009-2016) of 284 China's prefecture-level cities. The study concludes that an increase in economic growth target significantly weakens the intensity of environmental regulation. The conclusion still holds true after robustness tests, including changing measurement variables, regression samples, and conducting endogenous tests. The underlying reason for the inhibitory effect may be that in order to achieve economic growth targets, local governments prefer less stringent environmental regulations. They subsequently expand outputs in the short term by increasing the proportion of secondary industry in GDP, land transfer area, and fixed asset investment. Further research in this paper also finds that only cities with low economic development levels and low openness to the outside world experience the negative effect of a local government's annual economic growth target on environmental regulation intensity.

Automated summary

This study reveals that increasing economic growth targets significantly weaken environmental regulation intensity, as local governments tend to relax environmental regulations to achieve their goals.