Can institutional opening-up promote green development in cities? Evidence from China's Pilot Free Trade Zones

As a testing ground for China's institutional opening-up, Pilot Free Trade Zones (PFTZs) are of great significance in shaping a new global economic governance framework, addressing pollution and carbon reduction challenges, and fostering green economic development and transition. This study empirically assesses the influence of PFTZs establishment on urban green development (GD) using panel data from 284 Chinese cities between 2007 and 2020, using the asymptotic Difference in Differences (DID) method. The results indicate that the creation of PFTZs greatly encourages cities to develop green sustainably. In comparison to cities without PFTZs, the presence of PFTZs results in a notable average increase of 9.5% in urban green total factor productivity (GTFP). The impact of PFTZs on urban GD varies significantly across different geographical areas and city resource endowment conditions. Institutional innovation has a positive moderating effect on the PFTZs' promotion of urban GD. The influence mechanisms that PFTZs support urban GD mainly include the effects of green innovation, economic agglomeration, and environmental regulation. This paper provides crucial policy insights for advancing PFTZ construction, promoting urban green growth, and ultimately achieving the coexistence of human beings and nature in harmony.