Productivity trends of Chinese regions: A perspective from energy saving and environmental regulations

Energy saving and emissions reduction has recalibrated China’s economic development mode to a more sustainable way. In this paper, we construct a novel total factor productivity (TFP) index using a sub-vector enhanced hyperbolic distance function, which simultaneously credits for an expansion in economic output along with contractions in energy input and undesirable output. Subsequently, this index is employed to evaluate the TFP change for 30 provincial regions in China during 2006–2015. The results indicate that China’s productivity considering energy saving and emissions reduction experiences a gradual improvement shifting from decline to increase throughout this decade, and the amelioration can mainly be attributed to the efficiency improvements from the east regions, while the contributions from technical change component will not emerge until 2013 due to insufficient energy and environmental R&D investments. Finally, some policy recommendations are also put forward on how to enhance China’s productivity.