Construction of the Pilot Free Trade Zone and Chinese Green Total Factor Energy Efficiency

Round 1

Reviewer 1 Report

Overall, I think the study is solid and has focused on an important and popular topic. 

In the conclusion section, please add some discussion on how this study fits in the gap of the previous literature. Instead of simply stating the suggestions for governmental policies, please discuss more about the connections between your findings and your suggestions. 

The English langurage should be improved: there are some typos in the texts, for example, page5, line 203, there is a typo "oefficients"; please improve the readability in the introduction part as some sentences are not easy to understand; there are some grammar mistakes in the texts too, such as page 7, line 265: it should be "significant" rather than "significantly". The same mistake also appears somewhere else.

Author Response

Dear editors and reviewers,

 

We would love to extend our gratitude for the opportunity to revise our manuscript (manuscript ID: sustainability-2406629). Your valuable comments and suggestions are constructive for revising and improving our paper. We have carefully revised our manuscript accordingly and highlighted all the changes in the revised version. Responses to reviewers’ comments are listed as follows:

 

 

Response to Reviewer 1:

Thank you for your comments. Your insightful suggestions are very much appreciated and truly helpful for improving our paper. We hope that our revised manuscript will meet with your approval. All modified parts in the revised version are marked.

 

1. In the conclusion section, please add some discussion on how this study fits in the gap of the previous literature. Instead of simply stating the suggestions for governmental policies, please discuss more about the connections between your findings and your suggestions. 

Response: We have enriched the conclusions and policy implications based on your comments. The revised sentence as follows (Line 408-450):

5. Conclusions and policy implications

A quasi-natural experiment is conducted to investigate the influence of the PFTZ on GTFEE by employing a staggered DID model with panel data from 270 Chinese prefecture-level cities from 2009 to 2020. The research findings suggest that the PFTZ remarkably improves GTFEE, and this conclusion holds true after conducting several robustness tests. The PFTZ promotes ISU and improves GTI, thereby enhancing GTFEE through the two channels. Morever, PFTZ has a more remarkable effect on improving the GTFEE of coastal cities compared with noncoastal cities and nonresource-based cities compared with resource-based cities. These findings provide empirical evidence to further promote the construction of PFTZ. Most current research on the policy effects of PFTZ primarily focuses on whether PFTZ can promote economic growth rather than high-quality development, and relevant empirical research is lacking. This study fills the relevant gap in the field of environmental effects of the PFTZ and provide a certain supplement to the policy effects of PFTZ.

This study recommends the following policies to better harness the role of the PFTZ in improving GTFEE: The government should improve laws related to ecological protection and align environmental regulations with international standards to avoid negative environmental impacts resulting from the economic expansion of FTZs.

The research results in this article indicates that industrial structure is an intermediate channel for improving GTFEE. The governments of the PFTZ should further promote the improvement of local industrial structure, transform traditional industries and services into new industries and modern services, and develop local advantageous industries in accordance with local conditions. The PFTZ can improve GTFEE by enhancing the innovation level of enterprises. The government needs to leverage the driving role of GTI, pay attention to the carbon emission reduction effect brought by technological progress, and further guide enterprises in the FTZ to make reasonable use of the technological spillover effect brought by foreign direct investment to improve resource utilization efficiency.

The impact of PFTZ on GTFEE varies across different regions, withand PFTZ is more effective in promoting GTFEE in coastal cities showing a greater effectiveness in promoting GTFEE. The government should prioritize the expansion of PFTZ construction in coastal areas, especially in the Pearl River Delta region, while also focusing on the development of PFTZs in inland areas and improving their overall layout.

In the strategic context of increasing reform and openness, the government should strengthen the important role of FTZs in promoting trade facilitation, investment liberalization, transforming government functions, and promoting the development of financial markets. In addition, the government should actively promote and replicate successful cases and practical innovation policies within the FTZs. The original intention of establishing a FTZ is to promote GTFEE in pilot areas and drive the improvement of GTFEE in surrounding areas and even the whole country. Therefore, in the process of continuous optimization and development, the FTZ needs to radiate and drive the green transformation and upgrading of surrounding industrial structures.

 

2. The English langurage should be improved: there are some typos in the texts, for example, page5, line 203, there is a typo "oefficients"; please improve the readability in the introduction part as some sentences are not easy to understand; there are some grammar mistakes in the texts too, such as page 7, line 265: it should be "significant" rather than "significantly". The same mistake also appears somewhere else.

Response: Based on your comments, we have invited professionals to polish the language of this paper.

Reviewer 2 Report

The authors need to improve this paper. The sections are disarticulated, and some paragraphs need to be clearer or with an impact. I need help finding a real contribution or a gap to solve. These are my comments:

-Abstract: Some lines of this section could be clearer to read; improve with an English academic style. The authors could reinforce the gap and contribution of this research.

- Introduction: it is poor. There are some concepts or comments that need references. The structure could be better. Describe more methodology and possible alternatives. Focus on the references; some sentences need support, not only ideas without connections.

- Literature review: connect this section with the introduction and methodology. Some references are new, and I need help finding the main topics, principal ideas and their support. 

- Model and variables: authors need to explain more and justify the progressive DID model. Why not others? Which alternatives are the strength and weaknesses of this method and others? It is not a mechanical procedure.

- Results: focus on the contribution. It is not a description. Explain why and how. 

- Conclusions: it is the only description. The authors could improve this section by considering aligning this section with the introduction, literature review, and results. Review the grammar

Review the grammar and paper style

Author Response

Response to Reviewer 2:

Thank you for your comments. Your insightful suggestions are very much appreciated and truly helpful for improving our paper. We hope that our revised manuscript will meet with your approval. All modified parts in the revised version are marked.

 

1. 1. Abstract: Some lines of this section could be clearer to read; improve with an English academic style. The authors could reinforce the gap and contribution of this research.

Response: Based on your suggestion, we have revised the abstract. The revised sentence as follows (Line 10-25):

Abstract: In the context of China’s “double carbon” target, paying attention to regional green total factor energy efficiency (GTFEE) is crucial for ensuring a fundamental guarantee for China's free trade zones to in the promotion of sustainable development in China’s free trade zones. However, existing literature lacks attention to the environmental effects of these zones. This study takes advantage of the pilot free trade zone (PFTZ) implemented in 2013 as a natural experiment, utilizing panel data from 2009 to 2020 for Chinese prefecture-level cities. It adopts a progressive difference in difference model to assess the effect of the PFTZ on GTFEE. The findings demonstrate a remarkable improvement in GTFEE due to the PFTZ, which remains robust even after conducting robustness checks, including the parallel trend test. The PFTZ achieves this improvement by facilitating industrial structure upgrading and promoting green technology innovation. The positive influence of the PFTZ on GTFEE is particularly prominent in coastal cities and nonresource-based cities. This study contributes to the understanding of the environmental effects of free trade zones, providing a direct response to the key question of whether the free trade zone policy can effectively support high-quality economic development in the new era. Moreover, it offers useful policy implications for advancing further openness, winning the battle against pollution, and boosting high-quality economic development.

 

2. 2. Introduction: it is poor. There are some concepts or comments that need references. The structure could be better. Describe more methodology and possible alternatives. Focus on the references; some sentences need support, not only ideas without connections.

Response: Based on your suggestion, we have optimized the structure of the introduction and used references to support some of the sentences. The revised sentence as follows (Line 29-103):

1. Introduction

China’s rapid industrialization and urbanization have led to a remarkable increase in energy consumption and a rigid energy demand. China’s urbanization rate is projected to reach approximately 65% by 2022, which still lags behind the urbanization rates of developed countries. This condition indicates that China’s infrastructure construction will continue for the foreseeable future, allowing for further growth in total energy consumption [1]. However, the surge in energy consumption has resulted in a rise in carbon emissions. In 2021, China emitted more than 11.9 billion tons of CO2, accounting for 33% of total global emissions [2]. Moreover, China is expected to contribute to half of the world’s carbon emissions by 2040 [3]. To actively address climate change, China has committed to implementing stronger policies and achieving carbon neutrality by 2060, as outlined in its 14th Five-Year Plan. Enhancing green total factor energy efficiency (GTFEE) serves as a crucial pathway to support the realization of China’s carbon neutrality goals. GTFEE involves both expected and nonexpected outputs, capturing the negative environmental impact resulting from the energy consumption process during the evaluation of TFEE. Historically, China’s economy relied on a crude growth model, with the cost of economic development being paid at expense of energy and the environment. With the increasing shortage of resources and environmental problems, China has shifted toward high-quality development to improve economic development while reducing the pressure on resources. Although energy consumption remains a necessary input factor in the production process, China’s energy consumption per unit of gross domestic product (GDP) is far below the world average [4]. Therefore, improving GTFEE is of great importance for China to achieve its goals of green and sustainable development.

To navigate the complex international environment, align with international high-standard economic and trade rules, and bolster its position in the international trading system, the Chinese government has proactively introduced the pilot free trade zone (PFTZ) construction program. This initiative aims to expand China’s openness to the world and promote the formation of a new comprehensive opening pattern [5]. The China (Shanghai) PFTZ was officially established in October 2013 and has expanded to 21 provinces by the end of 2020, forming a strategic framework encompassing China’s coastal and western regions. One of the PFTZ’s key objectives is to facilitate trade and investment while implementing reforms in various sectors [6-7]. However, acknowledging the potential negative effects of trade liberalization is necessary while reaping its benefits, particularly concerning the decline in environmental quality resulting from the relocation of polluting industries. To address this issue, China has prioritized the development of green trade within the PFTZ, encouraging enterprises to establish green supply chain management systems, implement clean production practices, and promote the green transformation of trade [8]. As China strives to achieve its ambitious target of carbon neutrality, examining the impact of PFTZ construction on the environment and its potential to drive high-quality urban economic development remain important, thereby contributing to the improvement of GTFEE. This study aims to address the following questions: Does the PFTZ enhance GTFEE? What are the mechanisms through which the PFTZ influences GTFEE? Are there regional differences in the role of the PFTZ in GTFEE? Exploring the impact of entering the PFTZ participation on GTFEE will provide valuable insights for decision makers regarding China’s increased openness to the world and its commitment to green growth and development.

The possible contributions of this study are as follows: Although the existing literature has extensively discussed the economic effects of by PFTZ, insufficient attention has been paid to its environmental effects. This study fills this gap by examining the environmental effects of the PFTZ from the perspective of GTFEE. Given China’s current focus on carbon reduction and achieving carbon neutrality, improving energy efficiency is a primary goal. The direct impact of the PFTZ on regional GTFEE is explored, and the mediating effects of industrial structure upgrading (ISU) and green technological innovation (GTI) are further examined, providing a reference for the government to further improve the effectiveness of the PFTZ. The heterogeneity of cities is analyzed in accordance with their geographical locations and types, and relevant policy recommendations are proposed, which are of reference value for promoting ecological protection in the PFTZ and achieving the goal of carbon neutrality. The establishment of the PFTZ present an exogenous shock that provides a quasi-natural experiment. In this study, we construct a multiple difference in difference (DID) specification based on this setting to investigate the causal relationship between trade liberalization and environmental protection. Although most of the literature examines the effect of financial development on export trade using cross-national panel data or corporate panel data, the traditional empirical methods of econometric regression often struggle to effectively address endogeneity issues. The research method employed in this study allows for the evaluation of the objective effect of trade liberalization on environmental protection and provides a robust scientific test for the conclusions drawn in such literature. 

The rest of this article is arranged as follows: The second section provides a comprehensive literature review. The third section introduces the model, defines variables, and provides an overview of the data used. The fourth section presents the benchmark regression, robustness tests, mechanism tests, and heterogeneity analysis. The fifth section provides the conclusions and policy implications for future decision making.

 

3. 3. Literature review: connect this section with the introduction and methodology. Some references are new, and I need help finding the main topics, principal ideas and their support.

Response: Based on your suggestion, we have optimized the Literature review.

 

4. 4. Model and variables: authors need to explain more and justify the progressive DID model. Why not others? Which alternatives are the strength and weaknesses of this method and others? It is not a mechanical procedure.

Response: Based on your suggestion, we have added the reasons for choosing the progressive DID model in section 3.1. The revised sentence as follows (Line 180-194):

With the advancement of China's PFTZ construction process, pilot cities in FTZs are being promoted from coastal areas to inland regions. The establishment of PFTZ demonstration cities is being gradually promoted. The academic community often directly uses the traditional DID method to evaluate the policy effects of PFTZs. When using the DID method for policy evaluation, the research sample needs to be divided into two categories: those affected by the policy (experimental groups) and those not affected by the policy (control groups). The DID method evaluates the causal effect of policies by comparing the differences between the experimental groups and control groups before and after the event. However, the traditional DID model is only suitable for evaluating the policy effectiveness at a single time point and cannot comprehensively identify FTZs established at multiple time nodes [17]. This study utilizes a progressive DID model to investigate the influence of PFTZs on GTFEE based on the studies conducted by Jiang et al. (2021) [17].

 

5. 5. Results: focus on the contribution. It is not a description. Explain why and how.

Response: Based on your suggestion, we have explained the reasons and contributions of the results in the benchmark DID results.. The revised sentence as follows (Line 241-262):

Table 2 presents the results of the PFTZ effect on GTFEE. The first column shows the raw data without controlling the CV and the fixed effects of city and year. Columns (2) to (4) display the regression outcomes after adding the CV, year, and city fixed effects. The results indicate that the coefficients of Treat×Time are all significantly positive, revealing that the pilot policies have had a positive effect on increasing GTFEE. In the past, local governments have often compromised environmental quality standards to attract more foreign direct investment, leading to resource waste and mismatches that negatively affect economic development and the ecological environment [31]. However, China’s PFTZs were established to provide a level playing field for domestic and foreign enterprises, dovetailing with high-standard international economic and trade rules to further promote trade liberalization and eliminate policy barriers. The concentration of industries in PTFZs also increases competition among enterprises, weakening government intervention and strengthening the role of the market in factor allocation [7]. With the further deepening of marketization, the mismatch of environment-related resources is effectively improved, and PFTZs can eliminate inefficient and backward enterprises, enabling resources and labor to be transferred to more productive enterprises. This helps reduce pollution emissions and improve GTFEE. The research results of this study indicate that FTZs can have positive environmental effects, which is consistent with existing research [18-19]. This study provides a theoretical basis for examining the relationship between FTZs and environmental pollution issues by integrating trade liberalization, pollution emissions, and energy efficiency into a unified analytical framework.

 

6. 6. Conclusions: it is the only description. The authors could improve this section by considering aligning this section with the introduction, literature review, and results. Review the grammar.

Response: Based on your suggestion, we have enriched the conclusions and policy implications based on your comments. We have invited professionals to polish the language of this paper. The revised sentence as follows (Line 408-450):

5. Conclusions and policy implications

A quasi-natural experiment is conducted to investigate the influence of the PFTZ on GTFEE by employing a staggered DID model with panel data from 270 Chinese prefecture-level cities from 2009 to 2020. The research findings suggest that the PFTZ remarkably improves GTFEE, and this conclusion holds true after conducting several robustness tests. The PFTZ promotes ISU and improves GTI, thereby enhancing GTFEE through the two channels. Morever, PFTZ has a more remarkable effect on improving the GTFEE of coastal cities compared with noncoastal cities and nonresource-based cities compared with resource-based cities. These findings provide empirical evidence to further promote the construction of PFTZ. Most current research on the policy effects of PFTZ primarily focuses on whether PFTZ can promote economic growth rather than high-quality development, and relevant empirical research is lacking. This study fills the relevant gap in the field of environmental effects of the PFTZ and provide a certain supplement to the policy effects of PFTZ.

This study recommends the following policies to better harness the role of the PFTZ in improving GTFEE: The government should improve laws related to ecological protection and align environmental regulations with international standards to avoid negative environmental impacts resulting from the economic expansion of FTZs.

The research results in this article indicates that industrial structure is an intermediate channel for improving GTFEE. The governments of the PFTZ should further promote the improvement of local industrial structure, transform traditional industries and services into new industries and modern services, and develop local advantageous industries in accordance with local conditions. The PFTZ can improve GTFEE by enhancing the innovation level of enterprises. The government needs to leverage the driving role of GTI, pay attention to the carbon emission reduction effect brought by technological progress, and further guide enterprises in the FTZ to make reasonable use of the technological spillover effect brought by foreign direct investment to improve resource utilization efficiency.

The impact of PFTZ on GTFEE varies across different regions, withand PFTZ is more effective in promoting GTFEE in coastal cities showing a greater effectiveness in promoting GTFEE. The government should prioritize the expansion of PFTZ construction in coastal areas, especially in the Pearl River Delta region, while also focusing on the development of PFTZs in inland areas and improving their overall layout.

In the strategic context of increasing reform and openness, the government should strengthen the important role of FTZs in promoting trade facilitation, investment liberalization, transforming government functions, and promoting the development of financial markets. In addition, the government should actively promote and replicate successful cases and practical innovation policies within the FTZs. The original intention of establishing a FTZ is to promote GTFEE in pilot areas and drive the improvement of GTFEE in surrounding areas and even the whole country. Therefore, in the process of continuous optimization and development, the FTZ needs to radiate and drive the green transformation and upgrading of surrounding industrial structures.

 

Reviewer 3 Report

This paper is a timely effort for a step towards the sustainable development of China. It can be improved as follows before publication.

1. Please describe specific objectives of paper at the end of introduction as a specific short list. Originality of the paper should be highlighted with respect to references. Also, describe the organization of the paper at the end of Introduction.

2. References are not enough. It is required to identify highly relevant papers from a few years mostly from 2021-2023.

3. It is better to add a Methodology section and a methods flow chart in it.

4. Discussion are not enough with reference to the practical links of results to the real life physical environment. It is better to add a separate subsection at the end of "results and discussion" focusing on the practical recommendations and strategies for managers and policy makers.

Quality of English is good.

Author Response

Response to Reviewer 3:

Thank you for your comments. Your insightful suggestions are very much appreciated and truly helpful for improving our paper. We hope that our revised manuscript will meet with your approval. All modified parts in the revised version are marked.

 

1. 1. Please describe specific objectives of paper at the end of introduction as a specific short list. Originality of the paper should be highlighted with respect to references. Also, describe the organization of the paper at the end of Introduction.

 

Response: We have added the research objectives and structure of the paper in the introduction, and enriched our research contributions based on the literature. The revised sentence as follows (Line 66-103):

As China strives to achieve its ambitious target of carbon neutrality, examining the impact of PFTZ construction on the environment and its potential to drive high-quality urban economic development remain important, thereby contributing to the improvement of GTFEE. This study aims to address the following questions: Does the PFTZ enhance GTFEE? What are the mechanisms through which the PFTZ influences GTFEE? Are there regional differences in the role of the PFTZ in GTFEE? Exploring the impact of entering the PFTZ participation on GTFEE will provide valuable insights for decision makers regarding China’s increased openness to the world and its commitment to green growth and development.

The possible contributions of this study are as follows: Although the existing literature has extensively discussed the economic effects of by PFTZ, insufficient attention has been paid to its environmental effects. This study fills this gap by examining the environmental effects of the PFTZ from the perspective of GTFEE. Given China’s current focus on carbon reduction and achieving carbon neutrality, improving energy efficiency is a primary goal. The direct impact of the PFTZ on regional GTFEE is explored, and the mediating effects of industrial structure upgrading (ISU) and green technological innovation (GTI) are further examined, providing a reference for the government to further improve the effectiveness of the PFTZ. The heterogeneity of cities is analyzed in accordance with their geographical locations and types, and relevant policy recommendations are proposed, which are of reference value for promoting ecological protection in the PFTZ and achieving the goal of carbon neutrality. The establishment of the PFTZ present an exogenous shock that provides a quasi-natural experiment. In this study, we construct a multiple difference in difference (DID) specification based on this setting to investigate the causal relationship between trade liberalization and environmental protection. Although most of the literature examines the effect of financial development on export trade using cross-national panel data or corporate panel data, the traditional empirical methods of econometric regression often struggle to effectively address endogeneity issues. The research method employed in this study allows for the evaluation of the objective effect of trade liberalization on environmental protection and provides a robust scientific test for the conclusions drawn in such literature. 

The rest of this article is arranged as follows: The second section provides a comprehensive literature review. The third section introduces the model, defines variables, and provides an overview of the data used. The fourth section presents the benchmark regression, robustness tests, mechanism tests, and heterogeneity analysis. The fifth section provides the conclusions and policy implications for future decision making.

 

2. 2. References are not enough. It is required to identify highly relevant papers from a few years mostly from 2021-2023.

 

Response: We have supplemented the latest literature (2021-2023) based on your suggestion.

 

3. 3. It is better to add a Methodology section and a methods flow chart in it.

 

Response: We have provided necessary introduction to the DID model in section 3.1.  The revised sentence as follows (Line 180-199):

3.1. Benchmark model

With the advancement of China's PFTZ construction process, pilot cities in FTZs are being promoted from coastal areas to inland regions. The establishment of PFTZ demonstration cities is being gradually promoted. The academic community often directly uses the traditional DID method to evaluate the policy effects of PFTZs. When using the DID method for policy evaluation, the research sample needs to be divided into two categories: those affected by the policy (experimental groups) and those not affected by the policy (control groups). The DID method evaluates the causal effect of policies by comparing the differences between the experimental groups and control groups before and after the event. However, the traditional DID model is only suitable for evaluating the policy effectiveness at a single time point and cannot comprehensively identify FTZs established at multiple time nodes [17]. This study utilizes a progressive DID model to investigate the influence of PFTZs on GTFEE based on the studies conducted by Jiang et al. (2021) [17]. The Chinese Ministry of Commerce provides specific information on the construction of each PTFZ, including the pilot zone’s name, batch establishment, establishment time, and the specific implementation city for each zone. Thus, cities approved as PTFZ projects are considered treatment groups, and cities not approved as pilot projects considered control groups. On the basis of the PFTZ implemented in 2013, a progressive DID model was constructed to test the impact of PFTZ on GTFEE.

 

4. Discussion are not enough with reference to the practical links of results to the real life physical environment. It is better to add a separate subsection at the end of "results and discussion" focusing on the practical recommendations and strategies for managers and policy makers.

Response: Based on your suggestion, we have enriched the conclusions and policy implications based on your comments. We have invited professionals to polish the language of this paper. The revised sentence as follows (Line 408-450):

5. Conclusions and policy implications

A quasi-natural experiment is conducted to investigate the influence of the PFTZ on GTFEE by employing a staggered DID model with panel data from 270 Chinese prefecture-level cities from 2009 to 2020. The research findings suggest that the PFTZ remarkably improves GTFEE, and this conclusion holds true after conducting several robustness tests. The PFTZ promotes ISU and improves GTI, thereby enhancing GTFEE through the two channels. Morever, PFTZ has a more remarkable effect on improving the GTFEE of coastal cities compared with noncoastal cities and nonresource-based cities compared with resource-based cities. These findings provide empirical evidence to further promote the construction of PFTZ. Most current research on the policy effects of PFTZ primarily focuses on whether PFTZ can promote economic growth rather than high-quality development, and relevant empirical research is lacking. This study fills the relevant gap in the field of environmental effects of the PFTZ and provide a certain supplement to the policy effects of PFTZ.

This study recommends the following policies to better harness the role of the PFTZ in improving GTFEE: The government should improve laws related to ecological protection and align environmental regulations with international standards to avoid negative environmental impacts resulting from the economic expansion of FTZs.

The research results in this article indicates that industrial structure is an intermediate channel for improving GTFEE. The governments of the PFTZ should further promote the improvement of local industrial structure, transform traditional industries and services into new industries and modern services, and develop local advantageous industries in accordance with local conditions. The PFTZ can improve GTFEE by enhancing the innovation level of enterprises. The government needs to leverage the driving role of GTI, pay attention to the carbon emission reduction effect brought by technological progress, and further guide enterprises in the FTZ to make reasonable use of the technological spillover effect brought by foreign direct investment to improve resource utilization efficiency.

The impact of PFTZ on GTFEE varies across different regions, withand PFTZ is more effective in promoting GTFEE in coastal cities showing a greater effectiveness in promoting GTFEE. The government should prioritize the expansion of PFTZ construction in coastal areas, especially in the Pearl River Delta region, while also focusing on the development of PFTZs in inland areas and improving their overall layout.

In the strategic context of increasing reform and openness, the government should strengthen the important role of FTZs in promoting trade facilitation, investment liberalization, transforming government functions, and promoting the development of financial markets. In addition, the government should actively promote and replicate successful cases and practical innovation policies within the FTZs. The original intention of establishing a FTZ is to promote GTFEE in pilot areas and drive the improvement of GTFEE in surrounding areas and even the whole country. Therefore, in the process of continuous optimization and development, the FTZ needs to radiate and drive the green transformation and upgrading of surrounding industrial structures.

Reviewer 4 Report

·         Ratio between the input data :Labor, capital, and energy  vs  Industrial sulfur dioxide, industrial smoke, and industrial 170 wastewater such  output .

                                                                                                                             Based on which factors is used those parameters?

·         Carbon trading pilot policy (CTPP) –need more clarifications such parameter

Which is the main impact of :City type heterogeneity  

Author Response

Response to Reviewer 4:

Thank you for your comments. Your insightful suggestions are very much appreciated and truly helpful for improving our paper. We hope that our revised manuscript will meet with your approval. All modified parts in the revised version are marked.

 

1. Ratio between the input data:Labor, capital, and energy  vs  Industrial sulfur dioxide, industrial smoke, and industrial wastewater such output. Based on which factors is used those parameters?

 

Response: We use the super-efficiency slackbased measure-undesirable model to calculate GTFEE following the methods proposed by Zhou and Qi (2022). Labor is the quantity of labor of cities. Capital is the capital stock of cities and energy is total electricity consumption of cities. Industrial sulfur dioxide, industrial smoke, and industrial wastewater are the number of three types of pollutants of the city. We have provided corresponding explanations in the paper.

 

2. Carbon trading pilot policy (CTPP) –need more clarifications such parameter?

 

Response: We have supplemented the relevant contents of the Carbon emission trading policy. We deleted the sample of cities covered by the Carbon emission trading policy to exclude its impact on the results of this paper. The revised sentence as follows (Line 284-293):

 

During the research period of this study, China implemented carbon market policy and low-carbon city policy. To cope with climate change and reduce carbon emissions, the Chinese government implemented carbon trading pilot policy (CTPP) in seven provinces, including Guangdong, Beijing, Tianjing, Shanghai, Shenzhen, Chongqing, and Hubei in 2013. The CTPP may have an impact on the production behavior of enterprises by allocating carbon quotas free of charge to enterprises. Existing research has found that CTPP has a remarkable improvement effect on GTFEE [32]. We eliminated the sample of the seven pilot provinces covered by the CTPP and re-estimated using Eq. (1) to eliminate the interference of the CTPP. After eliminating the interference of CTPP, the coefficients of Treat×Time in columns 1 and 2 of Table 4 were significantly positive.

Round 2

Reviewer 2 Report

The authors improved the paper, but they could add more references and write more strong conclusions, aligning with the introduction. 

The authors improved the paper. Authors could review English grammar and orthography.

Author Response

Response to Reviewer 2:

Thank you for your comments. Your insightful suggestions are very much appreciated and truly helpful for improving our paper. We hope that our revised manuscript will meet with your approval. 

1.The authors improved the paper, but they could add more references and write more strong conclusions, aligning with the introduction. 

Response: We have enriched the Introduction and Conclusions based on your comments (Line 69-80, Line 411-417).  In addition, we have added the latest three literature on free trade zones (Line 538-545) .