Does the China's integrated environmental zoning regulation serve an effective approach for industrial restructuring?

Abstract

China's Integrated Environmental Zoning (IEZ) policy, initiated in 2021, targets industrial restructuring by enforcing specific regulations for each Integrated Environmental Unit (IEU) regarding spatial arrangement, emissions, and technological efficiency, among others. However, firms, as the fundamental operational units, may react differently to IEZ interventions, potentially causing unpredictable socioeconomic side effects. This study employs an agent-based model to assess the impacts of IEZ on industrial outputs, emissions, efficiency, and spatial layout in Hebei Province. The findings reveal that (1) IEZ fosters sustainable industrial growth (12.1 %) and cuts SO₂ emissions by 9.6 % by 2030 compared to the baseline scenario, primarily through the elimination of non-compliant industries and consistent technological advancements; (2) IEZ significantly suppresses air-pollution-intensive industries and considerably boosts low-emission sectors like equipment manufacturing, but has limited effects on water-pollution-intensive industries; (3) IEZ encourages firm transfers and agglomeration within IEUs, with intra-city transfers being the predominant form of industrial spatial restructuring (accounting for 90.9 %). This study suggests enhancing water pollution efficiency regulations within the IEZ and facilitating inter-city industrial transfers to optimize provincial industrial layout.