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

• We built a novel productivity index simultaneously considering energy saving and emission reduction.
• China’s productivity experiences a gradual improvement shifting from decline to increase during 2006–2010.
• Significant regional differences are observed in total-factor productivity changes.
• Efficiency change plays a dominant role in determining the trend of China’s productivity.
• Technical change contributes very little to China’s productivity improvement until 2013.

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.