How does industrial policy affect the eco-efficiency of industrial sector? Evidence from China

The industrial sector is the largest energy consumption sector and major source of environmental pollution in China. Improving the industrial eco-efficiency is significant for China to realize high-quality development. Based on the panel data of industrial sector in China's 30 provinces from 2006 to 2015, this paper first adopts a dynamic network data envelopment analysis to evaluate the eco-efficiency of industrial sector, and then uses panel Tobit regression model to investigate the impacts of industrial policies on the eco-efficiency of industrial sector. The results reveal that, (1) the overall eco-efficiency of China's provincial industrial sector is 0.7581 during 2006-2015, and the average efficiency of the industrial production process is higher than that of the waste treatment process. (2) The eco-efficiency of the industrial sector differs greatly by region, the eastern region is the highest, followed by the western and central regions, and the northeast is the lowest. (3) Industrial agglomeration impedes the improvement of industrial eco-efficiency, while industrial structure rationalization can promote industrial eco-efficiency. (4) The influence of industrial agglomeration and industrial structure rationalization on the efficiency of industrial waste treatment process is larger than that of the industrial production process. The findings of this paper reveal the importance of improving the efficiency of industrial subprocesses, and can also offer lessons for other industrialized nations to improve the industrial eco-efficiency.