Beyond end-of-pipe treatment: how whole-process clean production shapes export product quality

Abstract

This study examines the impact of clean production on export product quality by focusing on a key whole-process environmental regulation policy in China. Using a difference-in-differences approach and firm-level microdata, we find that the policy significantly improves export product quality and can explain 3.3% of the one standard deviation change in the export product quality of firms covered by the policy. Mechanism analysis shows that the policy functions through three interconnected channels: factor reallocation in source prevention, innovation compensation in production processes, and product transformation in end-of-pipe treatment. Additional analysis reveals stronger positive impacts on non-state-owned firms, large firms, and firms located in regions with high environmental regulation intensity. This study highlights the significant environmental and economic benefits of shifting from end-of-pipe pollution control to process control in production.