A better environment at the expense of export growth: A supply‐chain linkage perspective

We estimate the impacts of the 2017–2019 Chinese solid waste import ban on export growth through the channel of supply chain linkages. Using Chinese firm‐level transaction data from 2016, we constructed product‐level measures of import ban exposure to capture supply chain linkages. We find that exports with higher import ban exposure experience lower export growth after the import ban policy is implemented. Our results suggest that a 1% increase in exposure to the import ban of a product would lead to a reduction of its export growth by almost 2%. The effects are more prominent when export products have the closest characteristics to the banned solid waste. We also find that importing prices of solid wastes surge after the implementation of the policy, which leads to a higher price for exports that undermines the competitiveness of Chinese exports and results in lower export growth.