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Top1. Introduction
The development of the economy has always been the focus of all countries. The economy plays a vital role in human society, which can improve social welfare, promote democratic politics, enhance military strength, and increase international influence. There is no doubt that the economy is crucial and significant. Unfortunately, with the acceleration of industrialization and urbanization, the whole world is also under severe environmental pressure, such as global warming, soil degradation, and desertification.
As the largest developing country in the world, China has made great progress in its economy and environment after the implementation of Reform and Opening Up, with an average growth rate of 14.76% in green GDP in the past 14 years (Xiang, 2021). On the other hand, with the rapid development, China is also confronted with a common dilemma of how to maintain rapid economic growth and simultaneously reduce the pollution that has accompanied growth (Greaney, Li and Tu, 2017). Air pollution (Sun and Cheng, 2021), excessive emissions of industrial wastewater, waste gas, and solid waste (Cheng, Dai and Ye, 2016) are serious in China, and bring great damage to society, for example, air pollution may cause the loss of highly-educated talent (Lai et al., 2021). To address those problems, the Chinese government issued a series of policies. For increasing the utilization rate of sustainable resources, National Renewable Energy Long-Term Planning was passed in 2007. Over the next few years, the Airborne Pollution Action Plan was unveiled by the central government, aiming to reduce the air pollution in the northern region surrounding Beijing by 25%, and 20% in the Yangtze River Delta. The government proposed carbon peaks and carbon neutralization in 2020, which planned to achieve “zero-emission” and a “balance of payments” of carbon dioxide emissions.
Improving the quality of the environment is of great importance, while the growth of the economy cannot be ignored. How to achieve the advance of a sustainable economy has become a new topic to research. Ziolo et al. (2020) studied the relationship between energy efficiency, sustainable economic development, and greenhouse gas emission reduction in OECD countries. For analyzing the determining impact of green growth on economic development, Fernandes et al. (2021) was committed to examining the role of sustainable technical expertise and sustainable innovation in green growth. Wang et al. (2021) found that green industrial innovation and product innovation can effectively improve the economic performance of enterprises in China. Moreover, it is found that cooperation and integration can promote both economic and environmental progress. In the past few decades, due to the cross-regional flow of production factors and resource allocation, the degree of globalization has been dramatically deepened. With the exchange and integration of globalization, there have been various economic cooperation organizations, such as the EU, NAFTA, APEC, OECD, and ASEAN. Economic cooperation and integration can bring a lot of benefits to the participants. The regions that are involved in those organizations can gain profits from technological advances (Urban et al., 2015), economic increases (Parrenas, 1998), and environmental improvements (Yoo and Kim, 2016).
It is concluded that economic integration can be a great solution to the dilemma that China is facing. To investigate the economic and environmental benefits brought by the cooperation and integration in China, this study invents a novel model to measure the potential green gains. 341 regions are included in the sample. It is noted that due to the relatively small economic aggregates in Hong Kong and Macau, the two special administrative regions are regarded as one unit, and the whole of China is regarded as one unit. The economic and environmental potential under the collaboration among the mainland of China, Hong Kong, and Macao will be estimated. Taiwan is also taken into consideration, measuring whether Taiwan would benefit from the future deeper cooperation and integration with the mainland of China.