How has China’s industrial eco-efficiency been improved? Evidence from multi-scale countrywide study

The process of industrialization often causes resource depletion and environmental pollution. To shed light on China’s resource use and pollution trends in the context of the country’s rapid industrial growth, this study analyzes the eco-efficiency of China’s industry from 2000 to 2015. We quantify industrial eco-efficiency (IEE) for China and its provinces using data envelopment analysis (DEA) and analyze potential influencing factors at national and regional levels using Tobit regression. IEE in China and in most provinces shows a clear upward trend with some fluctuations, with national scores increasing from 0.394 to 0.704. There is strong regional disparity, with average IEE scores in eastern provinces (0.840) higher than those in central provinces (0.625), which are in turn higher than those in the northeast (0.537) and west (0.438). We next consider potential drivers. Economic development and foreign direct investment (FDI) are positively associated with IEE but appear to show diminishing returns. Environmental enforcement and market for technology are also positively associated with IEE, as expected. The impact of economic development, industrial sector structure, and investment in research and development (R&D) are modified by the stage of industrialization in each region. Targeted measures that can adjust industry structure, enhance environmental enforcement, attract FDI, and increase R&D investment may help further improve IEE in China.