1. Introduction
To further expand the scale of foreign trade, the Chinese government has launched a special cross-border freight railway project named the China Railway Express. The China Railway Express (CRE), which links the Chinese and European market, is the most important transport infrastructure serving ‘the Belt and Road’ initiative. Since the first part of the CRE project launched in Chongqing in 2011, 55 Chinese prefecture-level cities had launched the CRE project by the end of 2019. Among them, 12 express lines have achieved regular operation.
Figure 1 shows the number of trains operated under the China Railway Express project. From 2011 to 2019, both outbound trips and inbound trips increased sharply, and the proportion of inbound trips even reached 44.98% in 2019. During the pandemic of COVID-19, the performance of the China Railway Express was quite significant in maintaining the stability of the global supply chain and pandemic control: total trips of the China Railway Express in 2020 increased by 50% from a year earlier to 12,406; 9.39 million pieces of anti-epidemic prevention materials were transported to Europe and Western Asia through the China Railway Express according to the data reported by the Ministry of Commerce of China, making it a veritable channel of life.
The expansion of the China Railway Express has caused a significant impact on regional economic growth. From the perspective of influencing the spatial allocation of trade, the China Railway Express has reshaped the traditional economic model of coastal ports, improved the comparative advantages of China’s inland cities in foreign trade, and led to the gradual realization of ‘two-way circulation’ in the East–West integrated global value chain [
1,
2]. Relying on the convenience, safety, and cheapness of the CRE, the scale of China’s foreign trade has increased substantially. In 2020, the volume of China’s foreign trade increased by 7.62 times compared with 2001. The total import and export volume between China and Europe in 2020 was 9.29 times that in 2001. From the perspective of stimulating economic growth, the CRE project broadened the trade channels connecting the European market and East Asian market, reduced competition in the domestic market and transportation costs of enterprises participating in international trade, and intensified the stimulating effect of foreign trade on economic growth as a result [
3,
4,
5,
6]. According to data from the National Bureau of Statistics of China, the average annual economic growth rate of cities that launched the CRE project was about 2 percentage points higher than that of cities not involved in the CRE project from 2011 to 2019.
At present, technological innovation has become a considerable driving force of economic growth. In order to clarify the deep reasons why the CRE project can stimulate the economic growth of the launching city, many scholars have studied the impact of the CRE project on technological innovation. Wang and Bu (2019) empirically verified that the CRE project promoted enterprise innovation by stimulating exports: enterprises participating in international trade through the China Railway Express may be more willing to increase innovation investments [
7]. Li et al. (2020) tested the impact of the China Railway Express on technological innovation using data of Chinese prefecture-level cities and found that the CRE project promoted cities’ innovation, but this promotion of innovation was affected by governments’ behavior [
8]. From the perspective of stimulating total factor productivity, the China Railway Express changed the conditions for domestic industrial agglomeration, further optimized the spatial distribution of industries, reduced the information search cost of enterprises, and improved total factor productivity of the cities within 200 km of the departure stations [
9,
10,
11,
12].
However, China is not only confronted with the problem of how to stimulate economic growth but also the ecological risks that have gradually appeared in the process of development. With the improvement of China’s urbanization and industrialization, compound environmental risks occur frequently in the process of the modernized transformation of Chinese society [
13]. As a spontaneous attempt to expand the scale of foreign trade by Chinese cities, the CRE project also poses risks to the ecological environment [
14]. Rather than only focus on the effect of the CRE project on stimulating economic growth, excessive attention should be paid to its impact on environmental protection. Green innovation refers to new methods and technologies that can help avoid environmental damage, and the intensity of green innovation reflects the ability of a region to control pollution and its willingness to follow the concept of ecological development [
15]. Therefore, figuring out the impact of the CRE project on green innovation is more valuable for policy guidance than studying its impact on pollution emissions. Current studies have discussed how domestic transport infrastructure construction will affect green innovation. Li and Liu (2021) found that the construction of the high-speed railway in China improved the efficiency of factors’ cross-regional flow and thus promoted the green innovation of cities [
16]. Xia and Tang (2018) constructed a spatial econometric model and then tested the impact of China’s transport infrastructure construction on green innovation efficiency and its spatial spillover effects [
17]. They found that China’s domestic transport infrastructure construction promoted green innovation efficiency to some extent and caused a positive spillover effect on surrounding cities. However, the impact of the CRE project on green innovation is different from that of domestic railway lines: on the one hand, operation of the China Railway Express relies on established railway lines, which makes the CRE project more like a policy practice than infrastructure construction; on the other hand, factors such as customs clearance efficiency and cultural distance between China and countries along CRE routes will affect the operation of the international railway lines [
18,
19]. Therefore, it is necessary to theoretically and empirically analyze whether and how the China Railway Express affects cities’ green innovation. (The steps for launching the CRE project are as follows: first, a bilateral trade agreement should be signed; second, profits of the line will be assessed by China National Railway Group Limited; third, China National Railway Group Limited will negotiate with local governments to obtain government support for the operation of the CRE.)
First, this article theoretically analyzes the impact mechanism of the China Railway Express on green innovation. Then, a DID method is adopted to empirically test whether and how the China Railway Express affects cities’ green innovation based on the data of 284 Chinese prefecture-level cities. Finally, this article discusses the heterogeneity of the impact the China Railway Express has on cities’ green growth in detail and its spillover effect on surrounding cities.
2. Theoretical Hypotheses and Mechanism Analysis
In this section, we analyze theoretically how the launch of the CRE project affects cities’ green innovation intensity.
Figure 2 reports the specific impact mechanism.
The China Railway Express directly affects green innovation. Cooke et al. (2004) modified the innovation system theory, stating that regional technological innovation intensity depends on both endowments and incentives of technological innovation. Endowments refer to regional reserves of technology, capital, and talent [
20]. Incentives refer to the economic benefits generated by technological innovation, such as the improvement of production efficiency or government subsidies for R&D activities. This paper also analyzes the direct impact of the CRE project on cities’ green innovation intensity from these two aspects. From the perspective of green innovation endowments, launching the CRE project will enhance the innovation endowments of cities, which is conducive to green innovation. Firstly, the China Railway Express has broadened the trade channel between China and Europe, accelerated the flow of technology and promoted innovation cooperation between cities, and intensified the positive technology spillover effect [
21]. Secondly, according to Gibbons and Machine (2005), the China Railway Express has optimized the allocation of human capital and R&D resources among Chinese cities [
22]. Since most of the cities running the CRE project are inland industrial cities, this project provides new opportunities for the development of such cities, which in turn attracts the inflow of talent and capital, leading to a better match between innovation resources and the development goals of such cities. On the other hand, launching the CRE project will not be conducive to green innovation from the perspective of incentives for green innovation. Firstly, the China Railway Express promoted the upgrading of industries in launching cities and reduced energy consumption and pollution, thereby making green innovation less urgent in such cities.
Table 1 shows the changes in commodity types exported from cities providing regular freight train services from the launch year to 2019: scientific and technological products exported through the CRE in most cities increased substantially, and the upgrading of export goods reflects the upgrading of regional industrial structure. Secondly, the CRE project sharply expanded the market scale of industries not belonging to green industries, resulting in technological innovations to increase the production capacity of other industries and thereby crowding out green innovation [
16,
23]. The direct goal of launching the CRE project is to stimulate foreign trade in Chinese cities, so that most attention toward innovation has been geared toward improving the production efficiency and market acceptance of products. When the investment of capital and human resources is geared toward these innovation activities, the intensity of green innovation is adversely affected. According to the data of the China National Intellectual Property Administration, in 2019 green invention patents granted in CRE operation cities accounted for 3.7% of all the granted patents in those cities, whereas this proportion was 4.5% in cities that had not launched the China Railway Express. In 2007, this proportion in the two types of cities was relatively similar, accounting for 7.9% and 7.8%, respectively. This indicates that the CRE project could crowd out green patents.
Hypothesis 1. Launching the CRE project has a net direct negative impact on cities’ green innovation intensity.
The China Railway Express indirectly affects green innovation through promoting the scale of cities’ foreign trade. On the one hand, launching the CRE project reduces transportation costs and risks and encourages international trade between China and European countries. Compared with air transportation, the cost of the CRE is much cheaper. Taking the Wuhan–Hamburg line as an example, the freight of a 40HQ container in 2020 was about USD 8000, and enterprises can also receive subsidies up to 30% of the total freight from the Wuhan government. Compared with shipping, the CRE has no advantage in costs, but it is much faster and safer. Fixed procedures and lines mean that the CRE can effectively avoid occurrences similar to the Suez Canal blockage [
24]. On the other hand, CRE operating cities can expand the scale of foreign trade by encouraging more enterprises to participate in international trade, thereby making higher profits [
25]. As for the impact of exports on green innovation, Dietzenbacher and Mukhopadhyay (2007) argued that some types of export goods could influence resource distribution in green innovation: if a destination country sets strict environmental protection requirements for foreign goods or has a strong demand for products of green industries, then this will stimulate cities’ green innovation; if foreign countries have larger demand for traditional products, it will only promote technological innovation to increase production capacity [
26]. Ye and Yang (2019) verified that importing advanced production equipment and technologies can increase endowments for green innovation [
27]. Since the CRE mainly stimulates trade between China and European countries, we can expect that it will have an indirect positive effect on cities’ green innovation: European countries have relatively stricter environmental protection standards and have a larger demand for new energy utilization and pollution control equipment. At the same time, the concept of environmental production in European countries can be introduced into Chinese cities through import.
The China Railway Express indirectly affects green innovation through changing the intensity of environmental regulations in cities. The intensity of regional environmental regulations represents the environmental pressure imposed by the governments on enterprises, which is an important force to stimulate green innovation. A higher intensity of environmental regulation means that it is more urgent for enterprises to invest in green innovation. In other words, environmental regulation forces enterprises to improve production techniques, reduce pollution emissions, or transform themselves into green industries. In theory, the CRE will have two opposite impacts on regional environmental regulation: on the one hand, operation of the CRE will accelerate the economic growth of cities through foreign trade, so governments can move their attention from economic growth to environmental protection [
28]; on the other hand, at the initial stage of the CRE operation, a large amount of fiscal expenditure will be occupied in CRE operation subsidies or foreign trade stimulus policies, crowding out environmental protection expenditures, which may reduce the intensity of environmental regulations [
29]. Chinese cities, especially small- and medium-sized cities, are facing a serious government debt crisis, making their financial funds not abundant. In 2017, the debt-to-GDP ratio of Chinese cities was 311.04% [
30]. The stimulating effect of the CRE on economic growth of cities has not fundamentally solved the financial difficulties of small- and medium-sized cities. Therefore, it can be expected that launching the CRE project will reduce the intensity of environmental regulations and thus have an indirect negative impact on green innovation.
The China Railway Express indirectly affects green innovation through adjusting the degree of industrial specialization. From the above analysis, operation of the CRE can change the conditions for industrial agglomeration, for it has a stimulus effect on foreign trade. With the relocation of industries, the industrial specialization of cities is constantly changing: industries in small- and medium-sized cities tend to migrate to large cities as the CRE reduces the ‘market crowding effect’, leaving only industries that rely on local resource endowments or policy support to stay in those cities and foster specialized agglomeration in those cities. For large cities, the level of specialization may decline due to the influx of industries [
9]. At present, most of cities that launched the CRE project are regional communication hubs and at a relatively higher hierarchy. Therefore, operation of the CRE will cause a ‘siphon effect’ on industries of surrounding cities and improve the degree of industrial diversification. As the relocation cost of small-sized enterprises is lower, industrial diversification of CRE operation cities is mainly driven by the relocation of small-sized enterprises. According to the website of the National Bureau of Statistics of China, the ratio of the average fixed assets of enterprises in cities operating the CRE to the average fixed assets of enterprises in cities not operating the CRE was 1.302 in 2007, which fell to 1.089 in 2019, indicating that the gap in enterprise size between the two types of cities is narrowing. These data prove that there is a correlation between operating the CRE and the influx of small-sized enterprises. The impact of industrial specialization on green innovation is also diverse, which is affected by factors such as types of enterprises, R&D efficiency, information spillover speed, and the objectives of clustered organizations [
31,
32]. Industrial specialization driven by the relocation of small-sized enterprises is not conducive to green growth: small-sized enterprises often have a flexible organization mode and more efficient creation system, making them more adaptable to green industries which have high requirements for innovation ability, whereas CRE operation cities can benefit from the reduction in industrial specialization. On the other hand, a decline in the level of specialization means a more complete industrial chain for big cities, which is conducive to establishing a more complete innovation chain. Therefore, it can be expected that launching the CRE project will reduce cities’ industrial specialization level and thus have an indirect positive impact on green innovation.
Hypothesis 2. Launching the CRE project has an indirect positive impact on green innovation intensity through stimulating foreign trade and reducing industrial specialization, whereas it has an indirect negative impact on green innovation through reducing the intensity of environmental regulations.