Development, Environmental Quality, and the Location of Polluting Industry: A Case Study of China’s Beijing-Tianjin-Hebei Region

ile environmental pressure can prompt firms to locate energy- and pollution-intensive activities in less-regulated areas (Baumol, 1971), recent evidence from emerging markets suggests governments also take an active role in shaping industrial transitions in line with environmental, political, and economic development goals. The city-province of Beijing is a leading center of government, commerce, and culture in rapidly emerging China. It has also been plagued by increasingly severe air pollution (as well as other forms of local pollution), making it an early and persistent target of environmental cleanup efforts. This research is focused on understanding the role of environmental pressure in industrial (re)location decisions in greater Beijing and its neighboring provinces, Tianjin and Hebei, which form the Jing-Jin-Ji (JJJ) urban region. This initial work will involve analysis of data on the establishment of industrial firms in this region during the 2000-2014 period, interviews with local government and industry stakeholders, and archival analysis of industrial and environmental policies to characterize trends in, and drivers of, relocation by industry. This seed grant will provide a foundation for future work focused on the impacts of environmental policy on management decisions and, ultimately, on aggregate pollution levels in the JJJ region over the past 15 years. Insights from this body of work will shed light on the timing, nature, and drivers of industrial transitions we might expect in cities across China and around the world. The dynamics of these transitions will have profound impacts on location and nature of future business opportunities in the real estate profession.