Environmental regulatory competition, industrial regional transfer, and industrial carbon lock-in in China

Abstract The strategic interactions among local governments in implementing environmental regulations can influence the business decisions of enterprises within and outside the region, which is directly related to how to promote the low-carbon transformation and sustainable development of industrial structures through effective environmental policies. The study finds that industrial carbon lock-in has improved in most regions of China. Among them, institutional factors have gradually become the main obstacle to the improvement of industrial carbon lock-in, and the spatial correlation of industrial carbon lock-in poses greater challenges to unlocking carbon lock-in. Overall, the phenomenon of “race to the top” in environmental regulations among local governments is prominent. Based on this, the mechanism that local governments can attract industrial enterprises by improving the intensity of environmental regulations, thereby reducing social lock-in, is significant. In areas with high population density, high economic development level, high degree of opening up, and high level of green finance, local governments tend to increase the intensity of environmental regulations to attract industrial enterprises, and significantly reduce technological lock-in, industrial carbon lock-in, and institutional lock-in. In contrast, in areas with low population density, low economic development level, and low green finance level, local governments tend to adopt a “race to the bottom” or “weakening when faced with the strong” strategy, which will lead to the intensification of industrial carbon lock-in and technological lock-in. This paper provides theoretical basis and policy references for promoting China’s “dual carbon” goals to be achieved as scheduled.