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Top1. Introduction
Since the reform and opening up, China has made remarkable achievements. China's economy has maintained an average annual growth rate of nearly 10%, which is known as the “growth miracle”. However, behind the rapid economic growth, there are also high environmental costs (Liu and Lin, 2019; Song, Peng, et al., 2018; Wang et al., 2020; Zhou et al., 2019). According to a research report released by the World Bank in 2016 (Bank et al., 2016), the welfare loss caused by air pollution in China reached 10.9% of GDP. According to the bulletin of the environmental state in China 2015 issued by the Ministry of environmental protection of China, the air quality pollution of 265 cities in China exceeded the standard in 2015, accounting for 78.4%, and the proportion of cities with acid rain reached 40.4%. In the long run, this extensive mode of economic growth is by no means an inexhaustible driving force for sustainable economic development. On the contrary, it not only causes a serious overdraft of China's natural resources and makes the whole society bear high environmental costs, but also aggravates the imbalance of China's economic structure (Lin and Tan, 2016; Song et al., 2017).
Ecological and environmental problems have seriously affected China's sustainable economic development and the living environment of residents (Luo et al., 2020). It has even caused major hidden dangers for China's social stability. Given the significant impact of environmental pollution on the economy and society, the Chinese government has paid increasing attention to environmental protection and has included emission reduction of major pollutants in binding targets for economic and social development. In economic development, more emphasis has been placed on shifting from an extensive development model at the cost of a high ecological environment to a green development model (Song et al., 2020).
Environmental regulation refers to the regulation of economic activities by the government through corresponding policies and measures to achieve the win-win goal of environmental protection and economic development. Given the pollution discharge of enterprises, the Chinese government began to implement the pollution charge system in the 1970s by learning from foreign experience. In September 1979, China established China's pollution charge system in law and tried to collect pollution charges in some provinces (cities). In 2003, the State Council of China promulgated the Regulations on the Administration of the Collection and Use of Pollutant Discharge Fees, establishing a system of charging for the total amount of pollutants discharged. In September 2014, China's National Development and Reform Commission, the Ministry of Finance, and the Ministry of Environmental Protection jointly issued the Notice on the Adjustment of Pollutant Discharge Charges and Other Relevant Issues, requiring all provinces (cities) to raise the sulfur dioxide emission fee to no less than 1.26 yuan per kilogram by the end of June 2015.
However, despite the widespread concern of the central government and all sectors of society, there is a phenomenon of increasing environmental pollution in many provinces in China, which releases the signal that environmental problems have not been effectively managed (Economy, 2007; Wang et al., 2021). Although the chaos of environmental problems and environmental governance is related to the development stage of China, the incomplete implementation of environmental regulations by local governments cannot be ignored. This kind of “environmental regulation implementation deviation” is a core problem that perplexes China's environmental governance, and prevails throughout the country (Song, Du, et al., 2018; Wang and Wheeler, 2000). The central government is the maker of environmental regulation in China, while the local governments are the implementers. Under the background of political centralization and fiscal decentralization, due to the inconsistency between the objective function of the central government and the local government, the policy implementation of the local government is often not aimed at public welfare, but out of the self-interest motive of accomplishing the local tax target and the performance assessment target with GDP as the core (Garzarelli, 2004).