Can Low-Carbon Pilot City Policies Effectively Promote High-Quality Urban Economic Development?—Quasi-Natural Experiments Based on 227 Cities

Abstract

To explore the relationship between low-carbon pilot city policies (LCC) and the high-quality development of urban economy, this paper calculates the high-quality development index based on five dimensions to construct a double-difference model for empirical research, taking the data of 227 cities in China from 2004 to 2019 and the second batch of low-carbon pilot cities as the main research object. The research conclusions are as follows: (1) The LCC has promoted the high-quality economic development of the pilot cities, and has long-term effects, which are mainly reflected in three dimensions: Innovative development, residents’ life, and urban public services. (2) The promotion effect is mainly reflected in the big cities, as well as the eastern and central regions. (3) The intermediary function is embodied in three aspects: Industrial upgrading, urban technological innovation, and urban investment.

1. Introduction

Since China’s reform and opening-up, the country’s economy has achieved rapid development for more than 40 years and has now become the second-largest economy in the world. However, while promoting the sustainable development of China’s economy, the traditional economic growth method has also brought about many environmental pollution problems, such as haze weather and river pollution. In the long run, this development mode of economic growth at the cost of environmental damage is bound to be unsustainable, while a green, low-carbon, and circular development mode are imperative.

To deal with global climate issues, China should also achieve low-carbon development. Since the introduction of low-carbon economy in 2003, all countries in the world have made great efforts to develop low-carbon technologies and actively introduced low-carbon policies to promote the development of low-carbon economy. Countries represented by France, Sweden, and Denmark have explored new low-carbon development models and new economic growth points in energy, industry, construction, transportation, life, and ecology by creating ecological low-carbon cities and towns. They have achieved remarkable results.

Based on the experience of low-carbon economic development in European countries, China has begun low-carbon city pilot policies with low-carbon emissions and high-efficiency production as the ultimate goal since 2010 in several provinces and cities. In 2010, China’s National Development and Reform Commission identified the first batch of pilot regions for low-carbon city policies, including five provinces and eight cities. Then, the second and third batch of pilot lists were announced in 2012 and 2017, respectively. Since the announcement of the third batch of pilot lists, China has six low-carbon provinces and eighty-one low-carbon cities. Low-carbon provinces and cities are located in the three major regions of China’s eastern, central, and western regions, and the pilot cities are located in thirty-one provinces, municipalities, and autonomous regions in mainland China. These cities are relatively evenly distributed. China selects pilot cities and implements the application and approval system. First, local-level cities put forward detailed low-carbon development plans, then China’s National Development and Reform Commission will comprehensively consider their implementation plans. Based on the analysis of the implementation plan, the early urban low-carbon construction, and the layout of pilot urban areas, the primary list is determined. The cities on the primary shortlist are then evaluated and reviewed on-site to determine the final pilot list of pilots. In the practical sense of LCC, the policy incorporates five new development concepts of “innovation, coordination, greenness, openness, and sharing” in urban construction. LCC not only provides examples of the implementation effects of environmental policies, but also adds new impetus to high-quality urban economic development.

After the implementation of the LCC, scholars have also conducted various studies on the implementation of the policy. Dong Mei (2020) [1] believes that although the reduction degree of per capita carbon emissions or carbon intensity in each LCC area varies, most provinces and regions have achieved a reduction in per capita carbon emissions. The research by Deng Rongrong (2016) [2] also affirmed the inhibitory effect of LCC on urban carbon emissions. Shi Jiarui et al. (2015) [3] believe that although the carbon trading mechanism can effectively reduce carbon emissions, it will also have a certain negative impact on economic development. Therefore, the impact of LCC on economic development can be considered. This paper will study whether LCC affects the high-quality development of urban economy.

To specifically explore whether the urban economy has achieved high-quality development after the implementation of the LCC, this paper intends to use the data of 227 cities in China from 2004 to 2019 to comprehensively explore the impact of the LCC on the high-quality development of the urban economy. The contribution of the paper has the following three points: First, an evaluation system of the high-quality development of the urban economy has been constructed, which can be divided into five aspects: Innovative development, residents’ life, openness to the outside world, environmental protection, and urban public services. We set up 16 evaluation indexes and calculated 227 comprehensive indexes of high-quality urban economic development using the entropy method. Second, the existing literature mostly uses indicators, such as pollutant emissions to measure the implementation effect of environmental protection policies, but there may be some unconsidered factors that affect the evaluation of policy effects. This paper will use the double-difference method (DID) to evaluate the impact of LCC on the high-quality development of urban economy. This method makes up the shortcomings of existing research and makes the results of this paper more credible. Third, different cities have different infrastructure construction, industrial development level, and size of the city. The effect of policy implementation may be different in cities of different development levels and scales. According to the scale of the cities and the region of the cities, this paper discusses the influence of LCC on high-quality development of cities in different sizes and regions. Fourth, to further explore the impact of LCC on urban high-quality development, the mediation effect is analyzed from three perspectives of urban technological innovation, industrial upgrading, and urban investment.

The rest of this study is organized as follows: The second section is the literature review. The third section introduces the theoretical basis of this study and thus presents the research hypothesis of this study. Section 4 presents the study design, variable selection, and data. In Section 5, empirical results are presented, including benchmark model regression results, high-quality development sub-dimension regression results, long-term effect regression results, regional heterogeneity analysis results, and impact mechanism analysis. In Section 6, the research conclusions are summarized and policy recommendations are proposed.

2. Literature Review

2.1. Research on the Relationship between Environmental Regulation and the Quality of Economic Growth

Wang Qunyong and Lu Fengzhi (2018) [4] pointed out that environmental regulation can promote high-quality economic development within a certain intensity threshold, and the impact is not significant if it exceeds this threshold. Tao Jing and Hu Xueping (2019) [5], Wang Xiahui and He Jun (2018) [6] found that environmental regulation is generally helpful to the improvement in economic quality. In terms of subdivision, environmental regulation significantly improves economic efficiency, green development, and social welfare, but does not significantly promote the upgrading of industrial structure. Liu Yaobin (2018) [7] believes that environmental regulation promotes the quality of economic development mainly through technological innovation, industrial structure, and FDI. Chen Shiyi and Chen Dengke (2019) [8] found that haze harms the quality of China’s economic development through transmission channels, such as urbanization and human capital. Environmental governance can significantly promote high-quality economic development. Some scholars hold different views. Sun Yuyang and Song Youtao (2020) [9] believe that administrative-order environmental regulations have a promotion effect on the quality of economic growth, while market-incentive environmental regulation inhibits the improvement in the quality of economic growth. Wu Gezhi and You Daming (2019) [10] believe that at the national level, various types of environmental regulation inhibit technological innovation, and in the impact on green total factor productivity, only economic incentives and governance input environmental regulation tools play a promoting role.

2.2. Research on Low-Carbon Urban Policies in Other Countries

Ohnishi S (2018) [11] found that it is necessary to make efficient waste management systems for the transition to low-carbon cities. Tillie N (2018) [12] verified his hypothesis “densifying and greening leads to a more sustainable inner city” with the case study of Rotterdam inner city. Based on low-carbon city data in Europe, Wolff (2014) [13] verified that low-carbon city policies have a significant effect on reducing air pollution in transportation centers. Gehrsitz (2017) [14] has verified that Germany’s urban low-carbon policy can improve the level of healthy urban development and suppress newborn infant mortality. Bulkeley H (2012) [15] found that cities have played a growing role in the fight against climate change over the past two decades. The researches of scholars on low-carbon urban policies show the importance of urban low-carbon development, and mainly focus on the specific measures and methods of urban low-carbon development. This paper finds that low-carbon city policies may bring about the impact of improving the health level of cities. Therefore, can low-carbon city policies bring about other impacts? This is a question worth considering.

2.3. Research on the Relationship between LCC and the Quality of Economic Growth

After China identified the first batch of LCC provinces and cities in 2010, scholars conducted extensive research on the relationship between LCC and technological innovation, industrial structure upgrading, and the quality of economic growth. Xu Jia (2020) [16] believes that the low-carbon city pilot policy can induce green technology innovation to a certain extent at the overall level of enterprises. Xiong Guangqin (2020) [17] further studied and found that the implementation of LCC had significantly improved the level of green technology innovation of high-carbon emission enterprises in pilot cities. This also verifies the “Porter Hypothesis”. In terms of the impact on cities, Lu Jin (2019) [18] joined relevant urban policies, such as smart city pilots to examine the impact of LCC on urban technological innovation, and the results show that LCC can still promote urban innovation and development. Lu Jin and Wang Xiaofei (2020) [19] proposed that low-carbon urban policy has a significant impact on innovation and the upgrading of the industrial structure, and the policy has a positive spillover effect in space. After considering the impact of other related policies, such as innovative cities and new energy pilots, the low-carbon city policy has a slightly less promoting effect on the upgrading of the industrial structure. However, it still has a significant positive impact on the upgrading of the industrial structure. She Shuo and Wang Qiao (2020) [20] believe that the low-carbon pilot policy promotes the improvement in urban green total factor productivity. This policy has directly improved urban green total factor productivity by improving the level of urban innovation and promoting industrial upgrading, but the indirect effect of industrial structure transformation has not been verified. Gong Mengqi (2019) [21] found that the low-carbon pilot policy has a significant role in promoting foreign investment.

In summary, it can be found that scholars have achieved many achievements in environmental regulation and economic growth, LCC and industrial structure upgrading, urban economic growth, etc. Although the current research literature on environmental regulation and high-quality economic development is relatively abundant, there are still the following shortcomings: (1) At present, there are few studies on the impact of specific environmental regulations, such as LCC on economic development, especially with the LCC as the main variable, there is a lack of literature on its impact on the high-quality development of the urban economy. (2) In traditional research, indicators such as pollutant emissions are used to measure the implementation effect of environmental protection policies, which may affect our judgment on the policy effects. (3) Existing research affirms the role of LCC in improving the level of enterprise innovation and promoting the optimization and upgrading of urban industrial structures. However, on this basis, there is no clear conclusion on whether LCC has an impact on the high-quality development of the urban economy. This is the starting point and original intention of this study. Therefore, this paper intends to build a DID model to explore whether LCC has an impact on the high-quality development of urban economy and how it affects the development of urban economy. The high-quality development level of the urban economy is measured by a comprehensive index calculated by the entropy method.

3. Theoretical Analysis and Research Hypothesis

This paper will theoretically analyze the impact of the implementation of LCC on urban innovation and development based on the research by various scholars. Then, we will analyze whether industrial structure transformation, technological innovation, and urban investment play a role in this process.

3.1. How LCC Affects the High-Quality Development of Urban Economy

LCC cities should comprehensively consider their own economic development level, energy consumption structure, carbon emission status and other objective factors, reasonably set carbon emission targets, and formulate strict low-carbon environmental protection regulations to limit corporate carbon emissions [22], such as setting mandatory carbon emission standards and targets, implementing a strict industry access system, and introducing fiscal and taxation support policies for energy conservation and emission reduction [23], in order to achieve carbon emission reduction. Specifically, local governments impose carbon emission tax and energy tax on energy producers and users with high carbon emissions, which increases the environmental cost of enterprises in the production of high-pollution products [24]. However, the production cost of the enterprise may increase in the process. Due to the increase in pollution prevention and control costs, enterprises will face options, such as temporarily closing production lines, transferring production plants [25] or increasing R&D investment to achieve technological innovation. Due to the closure of production lines or the transfer of factories, a large number of sunk costs will be formed, and the increase in R&D investment can obtain innovation compensation [26,27]. The increase in the marginal production cost of enterprises brought about by environmental regulation will be detrimental to the improvement in enterprise performance [28]. From the perspective of rational people, most enterprises will choose the path of technological innovation to improve the innovation level of the whole city. The research by Bergek (2014) [29] also supports the idea that reasonable environmental regulation can promote technological innovation of enterprises. In addition, through the supervision of the public and the pressure of public opinion, the pilot cities encourage enterprises to raise their awareness of environmental protection to achieve carbon emission reduction, which can also promote technological innovation of enterprises to a certain extent [30].

In addition to the level of urban innovation, the high-quality development of the urban economy should have a wider scope, such as openness to the outside world, residents’ life, environmental protection, and urban public services, thus further analysis is required. Low-carbon pilot policies can promote the improvement in urban innovation levels, thereby increasing the attractiveness of foreign investment [21]. For developing countries, improving trade openness may help in reducing the carbon emission intensity of industries [31]. Therefore, low-carbon pilot policies may promote the open development of cities while reducing carbon emissions. To reduce carbon emissions, enterprises in LCC areas will increase investment in technological innovation and improve production processes, which will increase the cost of enterprises in the short term. However, in the medium and long term, once the innovation investment is fully transformed, the technological level of the enterprise will be improved, the competitiveness of the enterprise will be enhanced, and the income of the enterprise will also increase significantly. The development and growth of various enterprises can also accelerate the regional economic growth, improve the per capita income level of the region, and improve the living standards of residents. The growth of urban economy will increase the attraction of the region to foreign investment, and promote the development of regional finance and the upgrading of industrial structure. In addition, the improvement in the technological innovation level of enterprises not only promotes the economic growth of the city, but also improves the social welfare level of the region, reduces the energy consumption per unit of output, and realizes the green development of the city. Therefore, Hypothesis 1 is proposed:

Hypothesis 1.

LCC policies can promote high-quality urban economic development.

3.2. The Intermediary Mechanism of LCC Affecting the High-Quality Development of Urban Economy

The implementation of LCC can theoretically have an impact on the high-quality development of the urban economy by promoting regional innovation and development. What is the specific impact process? We conduct the following analysis: LCC emphasizes that each pilot region should give full play to the advantages of market allocation of resources, and guide enterprises to reduce carbon emissions through taxation or policy incentives. The environmental regulation based on market incentives is conducive to the increase in R&D investment of enterprises [32], forcing enterprises to upgrade equipment or invest in related technologies to improve profitability, thereby reducing the high cost of environmental regulation [33,34]. During this process, the regional investment will increase, and the production efficiency of enterprises invested to improve the level of innovation will increase [35]. In addition, enterprises that do not focus on innovation and some backward production capacity will gradually be eliminated [36]. Innovative enterprises have improved production efficiency [37], and have also realized the transformation and upgrading of the industrial structure. The development achievements promoted by technological innovation include not only the improvement in residents’ income, but also the high-quality development achievements, such as the sharing of achievements brought about by economic growth, the enhancement of foreign investment attraction capacity, and the effective governance of the urban environment [38]. In the process of LCC affecting the high-quality development of urban economy, the improvement in regional investment and innovation levels as well as the upgrading of industrial structure play an important role. Therefore, the following research hypotheses are proposed:

Hypothesis 2.

Industrial transformation and upgrading is an intermediary mechanism for low-carbon pilot policies to affect the high-quality development of urban economy.

Hypothesis 3.

Technological innovation is an intermediary mechanism for low-carbon pilot policies to affect the high-quality development of urban economy.

Hypothesis 4.

Urban investment is an intermediary mechanism for low-carbon pilot policies to affect high-quality urban economic development.

4. Model Setting and Variable Selection

4.1. Selection of Variables and Data Source

(1) The level of high-quality economic development (Qua_i,t): There are two approaches to measuring the level of high-quality economic development in existing research. One is to use a single indicator to measure, as Shangguan Xuming uses total factor productivity to measure the level of high-quality economic development (2020) [39]. The second is to use the multi-dimensional composite index to measure the level of high-quality economic development (Tao Jing (2019) [5], Liu Yaobin and Xiong Yao (2020) [7], Liu Jia (2020) [40]). Based on the availability data of pilot cities, this paper draws on the multi-dimensional evaluation index system of various scholars to construct an urban economic development quality measurement index system from five aspects: Innovation and development, residents’ life, openness to the outside world, environmental protection, and urban public services. The comprehensive index was calculated by the entropy method, and the specific indicators are shown in

Table 1. Evaluation index system of high-quality economic development.

Primary Indicators	Secondary Indicators	Unit of Measurement	Indicator Properties
Innovative development	Technology investment/financial expenditure	%	o
	Educational input/financial expenditure	%	o
	Number of patent applications	Piece	+
Residents’ life	Financial deposit balance/Financial loan balance	%	o
	Per capita income of urban units	%	o
	The proportion of added value of the tertiary industry	%	+
	Total social retail consumption/Gross Regional Product	%	+
Openness to the outside world	Utilization of foreign capital	Ten thousand US dollars	+
	Number of foreign-funded enterprises	Piece	+
Environmental protection	Industrial Wastewater Discharge/Gross Regional Product	Ton/100 million yuan	−
	Industrial Soot Emissions/Gross Regional Product	Ton/100 million yuan	−
	Industrial SO2 Emissions/Gross Regional Product	Ton/100 million yuan	−
Urban public services	number of hospital beds per 10,000 people	Pc/10,000 people	+
	Green area per capita	Square kilometers/10,000 people	+
	Road area per capita	Square kilometers/10,000 people	+
	Public budget expenditure/revenue	%	o

Note: “+” in the table indicates a positive impact, “−” indicates a negative impact, and “o” indicates a moderate impact.

.

(2) Upgrading of Industrial structure: We will analyze the upgrading of industrial structure from the perspective of advancement and rationalization. Among them, the advanced industrial structure (ARS) reflects the major industries in the region, and the calculation formula is:

$$AR{S}_{i,t}={\displaystyle \sum _{m=1}^3{y}_{i,m,t}\times m(m=}1,2,3)$$

(1)

Among them, y_i,m,t represents the proportion of m industry in i city to the regional GDP in period t. By expanding the proportion of the output value of the three major industries, it represents the upgrading of regional industries from the primary industry to secondary and tertiary industries.

The measurement of industrial structure rationalization (RIS) is based on the method of Gan Chunhui et al. [41], and the formula is as follows:

$$RI{S}_{i,t}=1-\frac{1}{3}{\displaystyle \sum _{i=1}^3\left|\left(Y_{i,t}/Y_t\right)-\left(L_{i,t}/L_t\right)\right|}$$

(2)

The rationalization of industrial results mainly analyzes the matching degree between the proportion of industrial output value and the proportion of employment. Y_i,t/Y_t represents the proportion of the output value of the three major industries in GDP. L_i,t/L_t is the proportion of the employment of the three industries to the total employment proportion. The larger the value of RIS_i,t, the higher the degree of rationalization.

(3) Urban technological innovation (IL): Referring to the research by Lu Jin (2019) [18], it is expressed by total factor productivity, the input variables are labor and capital, labor is expressed by the number of employees in urban units, and capital is represented by fixed asset investment using the sustainable inventory method. The output variable is measured by the real GDP of the cities. Finally, the DEA measurement of total factor productivity is carried out using the solution software.

(4) Urban investment (IV): Urban investment refers to the investment in fixed assets of the whole society of the city (Unit: 10 billion yuan).

(5) Control variables: The variables related to the high-quality development of the urban economy were selected as control variables in combination with relevant research (2020) [38]: Human capital (K₁), expressed as the logarithm of the ratio of the number of college students to the registered population. The financial support (K₂), the public budget expenditure is expressed by the logarithmic value. The urban population (K₃) is expressed by the logarithmic value of the registered population at the end of the year. The urban construction (K₄) is expressed by the logarithmic value of the urban construction land. The labor productivity (K₅) is expressed by the local GDP and the number of employed persons and the ratio is expressed in logarithmic value.

4.2. Model Settings

Since the first batch of LCC is mainly targeted at a provincial level, and the third batch of pilots started late, this paper selects the second batch of LCC as the research objects by constructing a comprehensive index based on the measurement of high-quality economic development. Drawing on Beck’s model (2010) [42], a double-difference model is built to incorporate the fixed effects of city and time into the basic model. The specific model settings are shown in Formula (1):

$$Qu{a}_{i,t}={\beta }_0+{\beta }_{1}LC{C}_{i,t}+\theta X_{i,t}+{\mu }_t+{\gamma }_i+{\epsilon }_{i,t}$$

(3)

Qua_i,t represents the high-quality economic development index of the city i in year t. LCC is a policy dummy variable. Since the policy was proposed at the end of 2012, the LCC takes 1 if the year of the pilot city is greater than or equal to 2013, and the rest of the years will be set to 0. The coefficient value β₁ represents the impact of LCC on the quality of urban economic growth. X_i,t represents control variables, including human capital, regional financial support, population size, urban construction, and labor productivity. ε_i,t is the random disturbance term, while γ_i and μ_t represent the fixed effects of region and time, respectively.

To verify the intermediary role of industrial structure upgrading and urban technological innovation in the process of LCC affecting the high-quality development of urban economy, this paper draws on Zhou Chaobo’s intermediary model (2020) [43] for reference, and first tests whether LCC significantly improves the comprehensive index of high-quality urban economic development. Second, it tests whether LCC can significantly promote the upgrading of urban industrial structure, urban technological innovation, and urban investment. Finally, the paper examines whether there is a mediating effect between the upgrading of urban industrial structure and technological innovation. The model is built as follows:

$$ARS={\beta }_2+{\beta }_{3}LC{C}_{i,t}+\theta X_{i,t}+{\mu }_t+{\gamma }_i+{\epsilon }_{i,t}$$

(4)

$$RIS={\beta }_4+{\beta }_{5}LC{C}_{i,t}+\theta X_{i,t}+{\mu }_t+{\gamma }_i+{\epsilon }_{i,t}$$

(5)

$$IL={\beta }_6+{\beta }_{7}LC{C}_{i,t}+\theta X_{i,t}+{\mu }_t+{\gamma }_i+{\epsilon }_{i,t}$$

(6)

$$IV={\beta }_8+{\beta }_{9}LC{C}_{i,t}+\theta X_{i,t}+{\mu }_t+{\gamma }_i+{\epsilon }_{i,t}$$

(7)

$$Qu{a}_{i,t}={\alpha }_0+{\alpha }_{1}LC{C}_{i,t}+{\alpha }_{2}ARS+\theta X_{i,t}+{\mu }_t+{\gamma }_i+{\epsilon }_{i,t}$$

(8)

$$Qu{a}_{i,t}={\alpha }_3+{\alpha }_{4}LC{C}_{i,t}+{\alpha }_{5}RIS+\theta X_{i,t}+{\mu }_t+{\gamma }_i+{\epsilon }_{i,t}$$

(9)

$$Qu{a}_{i,t}={\alpha }_6+{\alpha }_{7}LC{C}_{i,t}+{\alpha }_{8}IL+\theta X_{i,t}+{\mu }_t+{\gamma }_i+{\epsilon }_{i,t}$$

(10)

$$Qu{a}_{i,t}={\alpha }_9+{\alpha }_{10}LC{C}_{i,t}+{\alpha }_{11}IV+\theta X_{i,t}+{\mu }_t+{\gamma }_i+{\epsilon }_{i,t}$$

(11)

ARS represents the advanced industrial structure and RIS represents the rationalization of the industrial structure. IL and IV represent the innovation level and investment level of the city, respectively. X represents the control variable. Equations (4)–(7) analyze whether the LCC has a significant impact on the advanced industrial structure, rationalization of industrial structure, technological innovation, and urban investment. Equations (8)–(11) are used to analyze the intermediary effect of LCC on high-quality economic development, testing whether the advanced industrial structure rationalization of industrial structure technological innovation and urban investment could be used as a mediating variable.

4.3. Data Introduction

In this paper, the data of 227 cities were selected from 2004 to 2019 as the research sample. The total sample size is obtained by multiplying the number of cities by 227 and the sample years by 16. After excluding the cities with missing data, there were 26 cities in the LCC experimental group and 201 cities in the control group. The data of each index are derived from the Chinese City Statistical Yearbook, the City Statistical Yearbook, and the Statistical Bulletin of National Economic and Social Development over the years, and some missing data were replaced by the interpolation method. Descriptive statistics of the data have been sorted out in

Table 2. Descriptive statistics of urban panel data from 2004 to 2019.

Variables	Samples	Mean Value	Standard Deviation	Minimum	Maximum
Qua	3632	0.2956	0.0681	0.1797	0.5433
K1	3632	4.5940	1.0793	0	8.7820
K2	3632	14.3008	1.059	11.0624	198.0305
K3	3632	15.1152	0.6769	12.6028	17.3465
K4	3632	4.4372	0.8413	2.0794	7.5553
K5	3632	10.6199	1.7579	5.7006	17.1473
ARS	3632	2.2646	0.1969	1.3182	9.6843
RIS	3632	0.8783	0.0681	0.5265	0.9972
IL	3632	0.1286	0.1185	0.0117	1
IV	3632	13.1749	16.6117	0	198.2418

:

5. Empirical Test

5.1. Baseline Model Regression Result

The baseline model regression results are shown in

Table 3. Baseline model regression result.

Variables	(1) Qua	(2) Qua	(3) Qua	(4) Qua	(5) Qua	(6) Qua
LCC	0.0094 ** (0.0014)	0.0087 *** (0.0014)	0.0084 *** (0.0014)	0.0083 *** (0.0014)	0.0085 *** (0.0135)	0.0089 *** (0.0122)
K1		0.0022 *** (0.0007)	0.0020 *** (0.0007)	0.0019 *** (0.0017)	0.0019 *** (0.0007)	0.0021 *** (0.0002)
K2			0.0044 *** (0.0006)	0.0046 *** (0.0006)	0.0045 *** (0.0006)	0.0046 *** (0.0006)
K3				0.0124 *** (0.0028)	0.0134 *** (0.0028)	0.0111 *** (0.0099)
K4					−0.0020 (0.0011)	−0.0020 (0.0005)
K5						−0.0005 (0.0006)
Regional effect	Yes	Yes	Yes	Yes	Yes	Yes
Time effect	Yes	Yes	Yes	Yes	Yes	Yes
_cons	0.2797 ***	0.1079 ***	0.2704 ***	0.0915 ***	0.0782 **	0.0641
R2	0.5708	0.5734	0.5694	0.5794	0.5800	0.5867
N	3632	3632	3632	3632	3632	3632

Note: *** and ** indicate significant testing at the level of 1% and 5%, respectively. The values in the parentheses are the stable standard errors of the cluster.

, where the (1) column represents the result without adding control variables, and the results show that LCC has a positive promoting effect on Qua. To explore whether the impact of the low-carbon pilot policy on the quality of urban economic development has changed under the influence of control variables, Columns (2)–(6) of Table 3 are the regression results of our gradual addition of control variables K₁–K₅. It can be seen from the results that the coefficients of the variables are significant with the increase in the control variables. The empirical results verify the correctness of Hypothesis 1 “LCC policies can promote high-quality urban economic development”.

To analyze the specific dimension of the impact of the low-carbon pilot policy on the high-quality development of urban economy, the binary differential model is adopted for regression analysis, as shown in

Table 4. Dimensional regression analysis of LCC on high-quality urban development.

Variables	Innovative Development	Open to the Outside World	Residents’ Life	Environmental Protection	Urban Public Services
LCC	0.0010 ** (0.0005)	0.0006 (0.0004)	0.0045 *** (0.0007)	−0.0006 (0.0035)	0.0032 *** (0.0050)
Control variables	Yes	Yes	Yes	Yes	Yes
Regional effects	Yes	Yes	Yes	Yes	Yes
Time effect	Yes	Yes	Yes	Yes	Yes
_cons	−0.2866 *	0.0301	−0.0470 ***	−0.262	−0.0771 ***
R2	0.6210	0.4039	0.6703	0.2089	0.413
N	3632	3632	3632	3632	3632

Note: ***, **, * indicate that they passed the significance test at the level of 1%, 5%, and 10%, respectively. The values in parentheses are the stable standard errors of the cluster.

. It can be seen from the results that the impact coefficients of low-carbon pilot policies on urban innovation, residents’ life, and urban public service dimensions are 0.0010, 0.0045, and 0.0032, respectively, but the impact on the development of opening-up and environmental protection is not significant. The research shows that LCC’s promoting effect on the high-quality development of urban economy is mainly reflected in three aspects: Innovative development, residents’ life, and urban public service. The reason is that LCC can accelerate the progress of urban technology and bring about the rapid development of the regional economy, thus promoting the city to strengthen the investment in public services, and improving the living standards of residents.

5.2. Long-Term Effect Test

The implementation of LCC may affect the resource allocation of the city for a long time, thus bringing about the long-term impact. With the help of the dual-difference long-term effect model (2010) [42], this paper further discusses the long-term impact of LCC on the quality of urban economic development. A multi-period LCC dummy variable is established, and the multiplication term of the dummy variable Dj and LCC in the j years after the LCC is substituted into the model. In addition, Qua_i,t and its five-dimensional development index are used as the explained variables for regression. Dj represents the jth year after the implementation of LLC, and its value is 1, otherwise, it is 0.

$$Qu{a}_{i,t}={\beta }_5+{\displaystyle \sum _{i=0}^4{\beta }_i\times LCC}\times D_i+X_{i,t}+{\mu }_t+{\gamma }_i+{\epsilon }_{i,t}$$

(12)

The long-term impact verification results of LCC are shown in

Table 5. The long-term impact of LCC on the quality of urban economic development.

Variables	Qua	Innovative Development	Open to the Outside World	Residents’ Life	Environmental Protection	Urban Public Services
LCC × D0	0.0027 (0.0029)	0.0010 (0.0005)	0.0010 (0.0005)	0.0016 (0.0015)	0.0006 (0.0013)	0.0006 (0.0011)
LCC × D1	0.0006 (0.0039)	0.0011 (0.0006)	0.0011 (0.0006)	0.0017 (0.0014)	−0.0004 (0.0013)	0.0010 (0.0011)
LCC × D2	0.0006 * (0.0039)	0.0013 * (0.0005)	0.0029 (0.0005)	0.0029 * (0.0015)	−0.0006 (0.0013)	0.0016 (0.0011)
LCC × D3	0.0027 *** (0.0039)	0.0012 ** (0.0005)	0.0012 (0.0005)	0.0028 * (0.0005)	−0.0009 (0.0014)	0.0021 * (0.0011)
LCC × D4	0.0030 *** (0.0012)	0.0011 ** (0.0006)	0.0011 (0.0009)	0.0030 *** (0.0015)	0.0011 (0.0014)	0.0022 *** (0.0011)
LCC × D5	0.0054 *** (0.0012)	0.0019 * (0.0010)	0.0011 (0.0010)	0.0044 *** (0.0015)	−0.0010 (0.0013)	0.0027 *** (0.0011)
LCC × D6	0.0046 *** (0.0012)	0.0012 (0.0011)	0.0009 (0.0010)	0.0040 *** (0.0015)	0.0011 (0.0013)	0.0036 *** (0.0011)
Control variables	Yes	Yes	Yes	Yes	Yes	Yes
Regional effect	Yes	Yes	Yes	Yes	Yes	Yes
Time effect	Yes	Yes	Yes	Yes	Yes	Yes
_cons	0.0791 ***	−0.0285 *	0.0026	−0.0608 **	0.2239	−0.0813 ***
R2	0.6784	0.5528	0.4038	0.6665	0.1924	0.5024
N	3632	3632	3632	3632	3632	3632

Note: ***, **, * indicate that they passed the significance test at the level of 1%, 5%, and 10%, respectively. The values in parentheses are the cluster robust standard errors.

. It can be seen from the results that the effect of the LCC was not significant in the first 2 years after the implementation of LCC, indicating that there was a lag in the promotion effect of the policy. From the second year after its implementation, the promotion effect of the LCC on the quality of urban economic development began to appear and continued until the 6th year. In terms of dimension, the impact of the LCC on innovative development, residents’ life, and urban public service level also appeared in the second or third year, indicating that LCC had an impact on urban innovation development, residents’ life, and urban public service level. It has a long-term promotion effect, but the promotion effect on innovation development disappeared in the sixth year.

5.3. Parallel Trend Test

To prevent spurious regression results caused by the high-quality development trend of the city itself before the LCC, it is necessary to conduct a parallel trend test between the experimental group and the control group. In this paper, Beck’s multi-period DID model (2010) [42] was selected to test its parallel trend. The model settings are as follows:

$$Qu{a}_{i,t}={\beta }_0+{\beta }_{1}LC{C}_{i,t-6}+{\beta }_{2}LC{C}_{i,t-5}+\cdots +{\beta }_{11}LC{C}_{i,t+4}+X_{i,t}+{\mu }_t+{\gamma }_i+{\epsilon }_{i,t}$$

(13)

LCC_i,t+j represents the implementation of the LCC in the city. If city i starts the LCC in t ± j year, then LCC_i,t+j = 1, otherwise LCC_i,t+j = 0. In this paper, 2012 is the base period, and the regression analysis is conducted for the 5 years before the pilot and 5 years after the pilot, respectively, t = 2013, and the value of j ranges from −5 to 5. It can be seen from the testing process that if the coefficient of LCC_i,t+j is 0, it indicates that there is a parallel trend. It can be seen from Figure 1 that before the LCC, its confidence interval fluctuates around 0, while after the LCC, its confidence interval for the policy effect is far less than 0. As can be seen from Figure 1, before the implementation of the policy in 2013, the high-quality development index of the experimental group and the control group showed a parallel trend. However, the implementation of the LCC significantly expanded the difference in the high-quality development index between the experimental group and the control group. The double-difference model constructed in this paper has certain research significance.

5.4. Robustness Check

(1)

Join the first batch of low-carbon pilot cities

The provincial capital cities corresponding to the first batch of pilot provinces and the first batch of pilot cities are added to the regression to test the robustness of the conclusion that the LCC promotes the improvement in urban economic quality. The test results are shown in

Table 6. Robustness test of adding the first batch of pilot samples.

Variables	Qua	Qua
LCC	0.0140 *** (0.0012)	0.0138 *** (0.0012)
Control variables	Yes	No
Regional effect	Yes	Yes
Time effect	Yes	Yes
_cons	0.0994 **	0.2704 ***
R2	0.5912	0.5802
N	3632	3632

Note: *** and ** indicate that they passed the significance test at the level of 1% and 5%, respectively. The values in parentheses are the cluster robust standard errors.

. It can be seen from the table that the coefficient of the LCC term is significantly positive and the addition of the control variables has no influence on the result, which verifies the robustness of the conclusion.

(2)

Method of PSM-DID

To overcome the shortcomings of using the difference-of-difference model in previous empirical research, the propensity score matching double-difference method (PSM-DID) was used to test the robustness of the empirical results. The test steps are as follows: First, we scored all sample cities using covariate and probit models before PSM matching. Then, based on the scores, we used the PSM method to match non-pilot cities with similar scores for pilot cities. Finally, we deleted the data of cities that failed to match, and then we used the remaining samples of 2016 for DID regression. The regression results are shown in

Table 7. Regression results based on PSM-DID.

Variables	Qua	Innovative Development	Open to the Outside World	Residents’ Life	Environmental Protection	Urban Public Services
LCC	0.0057 *** (0.0014)	0.0011 ** (0.0005)	0.0026 *** (0.0007)	0.0007 (0.0005)	−0.0006 (0.0007)	0.0019 *** (0.0005)
Control variables	Yes	Yes	Yes	Yes	Yes	Yes
Regional effect	Yes	Yes	Yes	Yes	Yes	Yes
Time effect	Yes	Yes	Yes	Yes	Yes	Yes
_cons	0.0627	−0.0304	−0.0563 ***	0.0035	−0.2231 ***	−0.07312 ***
R2	0.5825	0.6210	0.6703	0.4034	0.1933	0.3275
N	2016	2016	2016	2016	2016	2016

Note: *** and ** indicate that they passed the significance test at the level of 1% and 5%, respectively. The values in parentheses are the cluster robust standard errors.

. It can be seen from the results that the LCC variable has a significant positive impact on the comprehensive indicators of high-quality development, innovative development, residents’ living standards, and the level of urban public services, which verifies the robustness of the previous results.

(3)

Exclude the impact of Other Urban Policies

The Chinese urban policies introduced in recent years include not only LCC, but also policies such as smart city pilots in 2013, new energy demonstration city pilots in 2014, and innovative city pilots in 2010, as well as the environmental protection interview with environmental regulation significance in 2014 and 2015. These policies may affect the high-quality development of the urban economy. To exclude other relevant policy effects, these policy dummy variables are added for regression. Inn, Ite, Et, and Ne, respectively represent the double difference dummy variables of the first batch of innovation pilot cities, the first and second batch of smart pilot cities, environmental protection interview cities, and the first batch of new energy demonstration cities. The test results are shown in

Table 8. Robustness test after adding other urban policies.

Variables	(1) Qua	(2) Qua	(3) Qua	(4) Qua
LCC	0.0055 *** (0.0014)	0.0062 *** (0.0014)	0.0089 *** (0.0062)	0.0079 *** (0.0014)
Ite	0.0086 *** (0.0009)
Inn		0.0186 *** (0.0011)
Et			0.0012 (0.0018)
Ne				0.0011 (0.0011)
Control variables	Yes	Yes	Yes	Yes
Regional effect	Yes	Yes	Yes	Yes
Time effect	Yes	Yes	Yes	Yes
_cons	0.0661 *	0.0883 **	−0.3626	0.0739 *
R2	0.5904	0.6110	0.5384	0.5798
N	3632	3632	3632	3632

Note: ***, **, * indicate that they passed the significance test at the level of 1%, 5%, and 10%, respectively. The values in parentheses are the cluster robust standard errors.

. From the results, the absolute value of the LCC coefficient has decreased, but it is still significantly positive, indicating that the results of this paper are relatively robust.

5.5. Heterogeneity Analysis

Based on the analysis of the overall city sample, the sample is subdivided according to the differences in infrastructure and economic development of each city, and the influence of low-carbon pilot city policies on the quality of urban economic development in different cities is explored. Given this, this paper uses the urban resident population of 1 million in 2013 as the distinction, above 1 million people are divided into large cities, and the rest is divided into small and medium-sized cities, and the three major regions are adopted for regression. There are 67 large cities, 160 small and medium-sized cities, and 100 cities in the eastern region, 64 cities in the central region, and 63 cities in the western region. The distribution of the three regions is shown in Figure 2. From the regression results in

Table 9. Analysis of regional heterogeneity.

Variables	(1) Based on City Size		(2) Based on Three Regions
	Large Cities	Small and Medium-Sized Cities	East	Central	West
$LLC$	0.0113 *** (0.0024)	−0.0035 * (0.0052)	0.0175 *** (0.0023)	0.0084 *** (0.01500)	−0.0057 * (0.0029)
control variables	Yes	Yes	Yes	Yes	Yes
Regional effect	Yes	Yes	Yes	Yes	Yes
Time effect	Yes	Yes	Yes	Yes	Yes
_cons	−0.1251	−0.1682 ***	0.0347	−0.5219 ***	0.2279 ***
R2	0.5860	0.4663	0.5459	0.5459	0.4403
N	1072	2560	1600	1024	1008

Note: ***, * indicate that they passed the significance test at the level of 1% and 10%, respectively. The values in parentheses are the cluster robust standard errors.

, it can be found that the low-carbon pilot policy has a significant effect on promoting the high-quality economic development of large cities, while it has a negative effect on small and medium-sized cities. Moreover, it has a significant positive effect on the low-carbon pilot policy in eastern and central regions, while it has a significantly negative effect on western regions.

5.6. Mediating Effect Analysis

To explore the mediating effect of the low-carbon pilot policies on the quality of urban economic development, the mediating effect model of Equations (4)–(11) is used to analyze whether industrial structure upgrading and urban technological innovation can be used as intermediary variables to participate in the process of low-carbon cost affecting the quality of urban economic development. The regression results are shown in

Table 10. Mediation effect regression results.

Variables	(1) ARS	(2) RIS	(3) Qua	(4) IL	(5) Qua	(6) IV	(7) Qua
LCC	−0.0122 (0.0142)	0.0160 *** (0.0039)	0.0084 *** (0.0014)	0.0430 *** (0.0041)	0.0043 *** (0.0013)	22.3508 *** (3.1615)	0.0375 *** (0.0044)
ARS
RIS			0.0278 *** (0.0063)
IL					0.1088 *** (0.0056)
IV							0.0005 *** (0.0001)
Control variables	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Regional effect	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Time effect	Yes	Yes	Yes	Yes	Yes	Yes	Yes
_cons	−0.4000	−0.0940	0.0704 **	1.0617 ***	−0.0514	33.6586	0.3768
R2	0.2712	0.5540	0.5821	0.6692	0.6231	0.2816	0.2171
N	3632	3632	3632	3632	3632	3632	3632

Note: *** and ** indicate that they passed the significance test at the level of 1% and 5%, respectively. The values in parentheses are the cluster robust standard errors.

.

As can be seen from column (1) in Table 10, there is no intermediary effect of advanced industrial structure in the process of LCC affecting the high-quality development of urban economy. It can be seen from column (2) that the LCC double-difference variable significantly promotes the rationalization of the industrial structure, and the existence of the intermediary effect can be further judged from column (3). From column (3), it can be seen that after adding the RIS variable, the RIS variable significantly promotes the high-quality development of urban economy, and the variable LCC is positive and significant, indicating that LCC played a certain role in the process of affecting the high-quality development of urban economy. Therefore, Hypothesis 2 “Industrial transformation and upgrading as the intermediary mechanism of LCC affecting the high-quality development of urban economy” has been verified.

To further analyze the mediating effect of technological innovation, it can be seen from column (4) in Table 10 that the variable LCC has a significant promoting effect on variable IL, which can be analyzed in the next stage. As can be seen from column (5), the coefficients of the variable LCC and IL are both significant, indicating that the mediating effect of IL exists, and it is a partial mediating effect. Therefore, Hypothesis 3 “Technological innovation is the intermediary mechanism through which LCC affects the high-quality development of urban economy” has been verified.

Columns (6) and (7) in Table 10 verify the mediating effect on urban investment. It can be seen from column (6) that the variable LCC has a significant promoting effect on variable IV, which can be analyzed in the next stage. It can be seen from column (7) that the coefficients of variables LCC and IV are both significant, indicating that IV plays a partial mediating role. Therefore, Hypothesis 4 “Urban investment is the intermediary mechanism for low-carbon pilot policies to affect high-quality urban economic development” has been verified.

6. Conclusions and Policy Recommendations

Based on the panel data of 227 cities in China from 2004 to 2019, this paper draws the following conclusions: First, the implementation of LCC has a significant effect on the quality of economic development in pilot cities, which verifies Hypothesis 1 that “LCC policies can promote high-quality urban economic development” and the effects are long-lasting. We divide the high-quality urban development indicators into five dimensions, including innovative development for further regression, residents’ life, openness to the outside world, environmental protection, and urban public services. Further regression found that LCC mainly promotes the innovation and development of the city, the improvement in residents’ living standards, and the urban public service level. Second, the low-carbon pilot policy has effectively promoted the quality of economic growth in large cities as well as central and eastern regions. However, the effect on small and medium-sized cities is not clear, and the impact on the western region is negative. Third, the LCC promotes the high-quality development of the urban economy by improving the level of urban technological innovation, which verifies Hypothesis 2 that “Industrial transformation and upgrading is the intermediary mechanism through which low cost affects the high-quality development of urban economy”. Then, the upgrading of industrial structure is measured by the rationalization of industrial structure and the advancement of industrial structure. It is found that the promotion effect of low-cost enterprises on the high-quality development of urban economy is through the rationalization of industrial structure, rather than through the advanced industrial structure. Hypothesis 3 which states that “Technological innovation is an intermediary mechanism through which LCC affect the high-quality development of urban economy” is verified. Finally, urban investment plays a partial intermediary role in the impact of LCC on high-quality development of urban economy, whereby Hypothesis 4 which states that “Urban investment is an intermediary mechanism of low-carbon pilot policies on high-quality urban economic development” is verified. The reasons for this result are analyzed as follows:

First, the LCC has improved the level of urban innovation in the process of achieving low-carbon development. It can be seen that in the face of the government’s requirement to reduce carbon emissions, enterprises reduce carbon emissions by increasing investment and improving production processes, and their technological innovation level has been improved. The improvement in the level of technological innovation of enterprises has enhanced the competitiveness of regional enterprises and promoted urban economic growth. The development achievements driven by technological innovation include not only increases in the income of local residents, but also shares the social welfare brought about by economic growth. However, LCC mainly limits carbon emissions, and has insufficient treatment of other pollutants in cities; therefore, they have not been able to promote urban green development and the development of openness to the outside world. This may be due to the fact that the implementation of the LCC does not have preferential policies for openness to the outside world. This may be something to consider in the future.

Second, the industrial upgrading effect of LCC is more apparent. This is due to the fact that LCC emphasizes that each pilot region should give full play to the advantages of market-oriented resource allocation and internalize the external cost of environmental pollution through the introduction of policies. Given the cost pressure, enterprises adjust their product structure and increase investment in technological innovation and clean energy application technology. In this process, some enterprises that do not focus on innovation and backward enterprises are gradually eliminated, thereby improving the production efficiency of the entire industry and realizing the transformation and upgrading of the industrial structure.

Third, the low-carbon city pilot mainly promotes the high-quality development of large cities, due to large cities with perfect infrastructure and strict policy implementation procedures, which can better implement LCC compared with small and medium-sized cities, thereby giving full play to the role of innovation. The compensation effect improves the quality of urban development. Due to their limited conditions, small and medium-sized cities are still in the stage of cost increase and LCC restricts the high-quality development of their urban economy. The LCC mainly promotes the high-quality development of the eastern region. Since the eastern region has a relatively developed economy and a relatively solid industrial foundation, it is more conducive to improving the quality of economic growth through innovation. However, the industrial development of the central and western regions is relatively weaker than the eastern regions; even if we choose to increase the innovation input, we will still face the problem of increased costs first, and the compensation effect of innovation has not yet been brought into play. In addition, the openness degree of the eastern region is already at a high level, thus the low-carbon pilot project has not been able to effectively improve the openness degree of the city to the outside world.

Based on the conclusions, this paper presents the following policy recommendations:

First, the implementation of the LCC has achieved initial results. On this basis, each pilot city should take measures to consolidate the economic benefits brought by the policy, and make use of the resources or infrastructure advantages of each pilot city measures to further develop reasonable low-carbon implementation specific plans, such as increasing support for new energy vehicles as well as encouraging enterprises to use high-efficiency and low-consumption production equipment. This ensures that cities can achieve high-efficiency economic development under the condition of low-carbon development. In addition, the government should innovate financing methods, actively create conditions, and support enterprises to invest in fixed assets and innovation through franchising, investment subsidies, and other means. Moreover, formulating corresponding policies to expand foreign investment, in order to expand the openness of the city, can better promote the high-quality development of the urban economy.

Second, the quality of urban economic growth has been improved under the LCC, but from the empirical results, urban environmental protection and openness to the outside world have not been well developed. The original intention of implementing the LCC is to enable people to live a better life. Therefore, it is necessary to improve the green aspects of cities under the LCC and improve the quality of people’s living environment. At the same time, under the guidance of reasonable policies, the innovative advantages brought by LCC will be utilized to promote the urban development of the greenness and openness.

Third, the impact of low-carbon pilot policies on different scales and residential cities. To further promote the coordinated development of cities, large cities can jointly establish a regional city circle with small and medium-sized cities to expand the radiation capacity of the central cities of the provincial capitals. This reduces the dependence of regional economy on a single large city, and the establishment of a city circle is more conducive to the smooth implementation of low-carbon pilot policies and other policies. To make the development of the three major regions more coordinated, the government should take measures to make the eastern region drive the development of the central and western regions. In the process, the government needs to perform appropriate macro-controls and make a reasonable configuration on the basis of the urban circle, giving full play to the location advantages of each city or city circle and implementing low-carbon policies rationally according to the industrial structure of each city. Small and medium-sized cities or cities in the central and western regions can strengthen economic cooperation with surrounding cities according to their own advantages. In this way, these cities can take advantage of regional cooperation, and promote the further upgrading of the industrial structure, improve the innovation level, as well as promote the high-quality development of the urban economy.

To further study the pilot policy of low-carbon cities, this paper presents the following research prospects. First, this paper only analyzes the implementation effect of the second low-carbon pilot city. In the future, further analysis of the third low-carbon pilot city can be conducted. Second, the pilot policies of low-carbon cities analyzed in this paper failed to carry out policy subdivision. Future research and analysis can be carried out according to specific policies and measures for cities to reduce carbon emissions. Third, the empirical analysis data on industrial transformation are collected based on the macro-level. In the future, the specific analysis of industrial transformation can be further based on the micro-level of the enterprise. Industrial transformation and upgrading can be based on the service industry for data collection. Fourth, the measurement of the comprehensive indicators of the high-quality development of the urban economy can be improved. For instance, for the analysis of urban innovation and development, the analysis of the welfare sharing of urban residents can be added to the residents’ social insurance payment indicators. In the aspect of urban environmental protection, the waste disposal rate can be increased to make the comprehensive measurement of urban economic development quality more perfect.