Study on the Effect and Mechanism of Circular Economy Promotion Law on the Utilization Rate of Industrial Solid Waste in Resource-based Cities

In recent decades, the impact of industrial solid waste (ISW) on the environment is arousing the government’s attention. Improving the comprehensive utilization rate of ISW not only reduces environmental pollution but also promotes the recycling of resources and ease the pressure on resources. This study uses the panel data of 278 prefecture-level cities in China from 2003 to 2015 to establish a DID model then empirically analyze the impact of the Circular Economy Promotion Law (CEPL) on the comprehensive utilization rate of ISW in resource-based cities. It was found that implementation of the CEPL will increase the comprehensive utilization rate of ISW in re-source-based cities. Furthermore, the higher the city's environmental regulation score, the more obvious the effect of the CEPL on the comprehensive utilization rate of ISW. This study also found that the impact of CEPL on the comprehensive utilization rate of ISW in resource-based cities will change due to variation of city’s type and city’s location. This study not only enriches the theoretical basis for the research on factors affecting ISW management but also provides new ideas for transforming the ISW management model and realizing a "win-win" between the economy and the ecological environment.

In the past few decades, scholars' research on ISW is mainly focused on how to reduce its pollution through technical means. By comparing four different ISW treatment methods, Nouri et al. found that a combination of land ll, incineration, and recycling is the best treatment method (Nouri et (Wu et al., 2015). However, few scholars focus their research perspectives on the impact of a speci c environmental regulation policy on the management of ISW. Moreover, the kinds of literature that involve the comprehensive utilization rate of ISW is also scarce. Therefore, this study empirically analyzes the impact of the CEPL on the comprehensive utilization rate of ISW in resource-based cities by constructing a DID model.
For each city, the laws and regulations passed and implemented at the national level can be regarded as a quasi-natural experiment that satis es the condition of homogeneity, while resource-based cities are xed. Therefore, it is possible to identify the impact of the implementation of the CEPL on the comprehensive utilization rate of ISW in resource-based cities through the difference-in-differences (DID) method. In addition, we use propensity score matching and instrumental variables to accurately identify this impact. Compare with other studies, the contributions of this paper are as follows.
(1) Considering the CEPL as the entry point for the rst time, it discusses in detail the impact of the CEPL on the comprehensive utilization rate of ISW in resource-based cities.
(2) Based on the O cial Promotion Tournament hypothesis, the speci c impact mechanism of CEPL on the comprehensive utilization rate of ISW in resource-based cities is discussed considering the competition for promotion of local o cials.
(3) Using a variety of robustness tests, it empirically veri es that when the resource constraint bottleneck is reached, strengthening environmental law enforcement can provide an important direction for resourcebased cities to alleviate the pressure from scarcity of resources.
The rest of this paper is arranged as follows: the second section introduces the background of the CEPL, resource-based cities, and the research hypotheses; the third section introduces the data sources and the setting of empirical models; the fourth section presents the empirical test and mechanism analysis; the fth section analyzes the differential impact of CEPL on the comprehensive utilization rate of ISW in resource-based cities; nally, the conclusions and policy recommendations are offered in the sixth section.

Circular Economy Promotion Law (CEPL)
The idea of circular economy originated from the spaceship theory proposed by American economist Boulding in the 1960s (Boulding, 1966), he advocated the establishment of a "circular economy" that does not deplete resources, does not cause environmental and ecological pollution, and can recycle various resources, instead of the "single-program economy" of the past . In the 1990s, sustainable development strategies became a global trend. Environmental protection, cleaner production, green consumption, and waste recycling began to be integrated into a systematic economic development model characterized by recycling resources and avoiding waste generation. Meanwhile, some developed countries, such as Germany and Japan, have started the legislative practice of circular economy In 1996, the former State Planning Commission of China submitted a draft law on the comprehensive utilization of resources to the State Council, but it didn't work because of different views on it. At the end of the 20th century, the Environmental and Resource Protection Committee of the National People's Congress, in uenced by foreign cleaner production legislation, began to discuss issues related to the formulation of cleaner production laws. In 1999, following the legislative plan of the Ninth National People's Congress Standing Committee, the Environmental Resources Commission established a drafting leading group for the Cleaner Production Promotion Law and entrusted the Economic and Trade Commission of the State Council to draft the law. After 3 years, a draft was formed and submitted to the Standing Committee of the National People's Congress. In June 2002, this law was reviewed and passed at the 28th meeting of the Standing Committee of the Ninth National People's Congress.
Since 2002, in uenced by some developed countries' research on waste recycling and the improvement of corresponding legal systems, scholars in China had begun to put forward proposals for the comprehensive utilization of cleaner production and resources. Besides, they also considered the development of a circular economy and relative legislative work. Their perspectives received the attention of the legislature. In March 2005, President Hu Jintao clearly proposed to speed up the formulation of the CEPL, then the Standing Committee of the National People's Congress decided to include the formulation of the CEPL into a legislative plan. According to the legislative plan of the Standing Committee of the National People's Congress, the Environmental and Assets Supervision and Administration Commission established the CEPL drafting leading group, formally launched the CEPL legislative work. In August 2008, the Fourth Meeting of the 11th Standing Committee of the National People's Congress deliberated and passed the CEPL, which was formally implemented on January 1, 2009.
The CEPL clari es the comprehensive utilization of ISW, requiring enterprises to comprehensively utilize industrial wastes such as y ash generated in the production process in accordance with national regulations to improve the level of waste reuse and resource utilization. In addition, if an enterprise does not have the conditions for comprehensive utilization of the waste generated in the production process, it shall provide it to quali ed producers and operators for comprehensive utilization.

Resource-based City
Resource-based cities are cities that use regional mineral and forestry resources in their leading industries. With the advent of the industrial revolution, resource-based cities have appeared on a large resource-based cities in China cannot completely change their development models in the short term to achieve sustainable development.
To improve the long-term mechanism of sustainable development and promote the sustainable development of resource-based cities, in 2013, the State Council issued a circular on the sustainable development of resource-based cities in China. The circular identi ed 126 prefecture-level cities as resource-based cities among 334 prefecture-level cities and divided these cities into four types: regenerative, grow-up, growing, and recessionary. We show the distribution and types of all resourcebased cities in Fig. 1. It can be seen from Fig. 1 that resource-based cities are mainly distributed in the central and western regions of China. Moreover, the main types of resource-based cities in the central region are grow-up, while the types of resource-based cities in the western region are more diverse, including all four types. Moreover, the resource-based cities in the northeastern region are mainly recessionary.

The O cial Promotion Tournament Hypothesis
As one of the measures of environmental governance, the compulsory environmental regulations implemented by the government have gradually become the main means for local governments to complete the assessment of ecological goals in recent years. This is closely related to the transformation of the assessment indicators for the promotion of o cials since China's reform and opening up. Since the Qin Dynasty, the Chinese central government has had absolute control over the promotion and removal of local o cials (Li and Zhou 2005), due to incomplete and asymmetry of information, the central government often uses key work content as a measurement indicator when considering the promotion of local o cials and creates a promotion targeted yardstick competition among subnational governments, which is widely known as the O cial Promotion Tournament (Zhang et al., 2020).
Since the reform and opening up, the focus of the Chinese government has shifted to economic construction. Therefore, the gross domestic product (GDP) has become the most important indicator for evaluating the performance of local o cials (Li and Zhou 2005; Liu and Li 2019) and played an important role in the talent evaluation system (Edin, 1998;Blanchard and Shleifer, 2001). Such a promotion tournament has made an enormous contribution to Chinese economic growth, making China grown rapidly in the past several decades and became the second-largest economy worldwide (Jiang, 2018;. Chinese environmental problem is not only the result of economic growth in industrialized developing countries but also the political issues (Wu and Cao, 2021). Since the reform of the nancial system in 1994, Chinese local government tax revenue has decreased. The single o cial promotion tournament gradually revealed its drawbacks. When o cials face competition for resources and face multiple mandatory goals in the short term, they will tend to prioritize the goals that are conducive to obtaining promotion opportunities (Ma,  Therefore, in order to increase the opportunity for promotion, local government o cials have to use limited resources to attract capital and other factors to ensure economic development, resulting in a reduction in environmental governance expenditures and environmental pollution has become the price of economic development . This not only poses a serious threat to Chinese long-term development but also has a profound impact on the global environment. In order to cope with the increasingly serious environmental problems, the central government has begun to consider including environmental performance in the evaluation indicators for o cial promotion. The proportion of green indicators is increasing (Lu and Landry, 2014). Whatever, in 2009, when the CEPL was promulgated and took effect, environmental protection had already had a certain status in the promotion and assessment of o cials, and local governments would actively promote the implementation of the CEPL. As for resource-based cities, since the main industries are developed based on the mining and processing of minerals, related ISW are generated more than nonresource-based cities and environmental problems are more prominent than other cities, so when the CEPL was promulgated, o cials in resource-based cities were more willing to strengthen law enforcement, resulting in the CEPL's promotion of the comprehensive utilization rate of ISW in resourcebased cities signi cantly higher than other cities. In addition, when the original environmental regulation intensity of a resource-based city is relatively high, the implementation of the CEPL will be favorable. The higher the intensity of environmental regulation, the more obvious the promotion of the CEPL on the comprehensive utilization rate of ISW in the city.

Modeling setting
In order to test the impact of the "Recycling Economy Promotion Law of the People's Republic of China" on the comprehensive utilization rate of ISW in resource-based cities, this paper establishes the following DID model: Where Rate it stands for the comprehensive utilization rate of the city i in year t, and the coe cient β 1 represents the impact of the CEPL of the People's Republic of China on ISW in resource-based cities, X is determined by a matrix composed of a series of control variables, γ is the coe cient matrix of the control variables' matrix, d i represents the xed effect of the city, μ t is the xed effect of the year, and ϵ it represents the random error term.

Data Source
This study involves the two core variables of the comprehensive utilization rate of urban ISW and whether the city is resource-based city. The data of the comprehensive utilization rate of ISW can be obtained from the China City Statistical Yearbook, the data of resource-based cities are from the o cial website of the Chinese central government. The related data of other variables mainly come from the CNRDS database and CSMAR database. In all the data, the real annual GDP of the city is obtained after adjusting according to the GDP index published by the province where the city is located, using 2003 as the base period. The per capita GDP of the city is adjusted by dividing the adjusted real GDP by the year-end population of the city in that year. In addition, the missing values are eliminated from the data sample. Finally, a sample composed of 3588 observations in 278 cities from 2003 to 2015 is obtained.

Comprehensive utilization rate of ISW
ISW is a category of solid waste, which refers to solid waste generated in industrial production activities, including various waste residues, dust, and other wastes discharged into the environment during industrial production. It can be divided into general industrial waste (such as blast furnace slag, steel slag, red mud, non-ferrous metal slag, y ash, coal slag, sulfate slag, waste gypsum, desulfurization ash, calcium carbide slag, salt mud, etc.) and industrial hazardous solid waste. In this study, the comprehensive utilization rate of ISW is the dependent variable, denoted by Rate it , and its calculation formula is as follows: Where CUISWA it stands for the comprehensive utilization of ISW amount of city i in year t, ISWG it is the amount of ISW generation of the city i in year t, CUS it represents the comprehensive utilization of previous years' storage of city i in year t.

Other Variables
In order to reduce the bias caused by the omitted variables, this study selected a series of control variables to be added to the model (1) for estimation, including the logarithm of the city's real GDP, the per capita GDP, the logarithm of the city's end-of-year population and the secondary industry, the ratio of output value to GDP, etc. The symbols and explanations of each variable are shown in Table 1.

Unit Root Test And Descriptive Statistics
The situations of different provinces in China vary a lot, thus the unit root tests are suitable for that they hold the assumption of individual unit root processes in each panel-data series (Chen, 2013). All the results of the unit root test are listed in Table 2. Based on the results of In addition, Table 3 shows the descriptive statistics for main variables, the results show that the mean of the comprehensive utilization rate of ISW (Rate) is 77%, indicating that China's ISW management is at a relatively high level. However, the comprehensive utilization rate of ISW in different cities and different years varies greatly, indicating that there are big differences in the management of ISW between cities.
Besides, the secondary industry's share of GDP shows a situation similar to that of the comprehensive solid waste utilization rate. Although the country's secondary industry's share of GDP is at a relatively high level as a whole, there are still large differences between regions.

Impact of CEPL on resource-based cities' comprehensive utilization rate of ISW
The regression results of CEPL on the resource-based cities' comprehensive utilization rate of ISW are shown in Table 4. Column (1) shows that there is a signi cant positive promotion between CEPL and resource-based cities' comprehensive utilization rate of ISW with a regression coe cient of 0.089, but this result is not robust and there may be measurement errors caused by missing variables. Therefore, in columns (2) (3) (4) of Table 4, year xed effects, city xed effects, and control variables are added in sequence, the results show that CPPL has a signi cant and robust promotion effect on the comprehensive utilization rate of ISW in resource-based cities with a regression coe cient of 0.101, 0.064 and 0.064, respectively.
The above results show that the CEPL has signi cantly improved the comprehensive utilization of ISW in resource-based cities. In theory, the law will promote the comprehensive utilization of ISW in all cities. However, the industries of resource-based cities mainly rely on the utilization of local mineral resources.
Once a national law of promoting circular economy is enacted, resource-based cities have obvious advantages to ensure law enforcement.

Common trend test
The premise that the difference-in-differences (DID) method can be used to estimate the model is that the treatment group and the control group have a common trend before the policy is implemented. In other words, before the implementation of the CEPL, there was no signi cant difference between resourcebased cities and general cities in the comprehensive utilization rate of ISW, but after the implementation of the policy, there will be signi cant differences. Therefore, this study draws on the research of Beck et al. (2010) and uses the event analysis method to construct the following model for the common trend test.

Placebo Test
The term "placebo" comes from a randomized experiment in medicine. For example, to test the e cacy of a certain new drug, at this time, the people participating in the experiment can be randomly divided into two groups, one of which is the treatment group, taking the real drug; and the other group is the control group, taking a placebo and not allowing participants know whether they are taking the real medicine or a placebo, so as to avoid subjective psychological effects from affecting the experimental effect, which is called the "placebo effect".
As China's environmental protection policies and regulations change every year, the above identi cation methods cannot eliminate the impact of other policies on ISW in each city. Placebo testing is needed to eliminate the impact of other policies and regulations on ISW in each city. In this study, we refer to Chen et al. (2021) and retain a sample of non-resource-based cities, then randomly selecting 50 cities as the "pseudo-treatment group". Furthermore, we randomly selected 1 year as a virtual policy implementation point from 2003 to 2015. In order to ensure the robustness of the results, we repeated it 10,000 times, the results of the placebo test are reported in Fig. 3. It can be seen from the gure that the coe cients estimated for these 10,000 times approximately obey a normal distribution with a mean value of zero, and the corresponding P values are all lower than 5%. The result of the placebo test indicates that the increase in the comprehensive utilization rate of ISW in resource-based cities is due to the implementation of CEPL.

PSM -DID
In order to resolve the systematic differences in trend changes between the treatment group and the control group and reduce the estimation error of the DID method, we used the propensity score matching (PSM) method proposed by Heckman (1998) for the robustness test. Before estimation, the PSM-DID applicability test needs to be performed, that is, whether there is a signi cant difference between the treatment group and the control group after matching. The test results are shown in Fig. 4 and Fig. 5. It can be seen from Fig. 4 that the standardization deviation of most variables is reduced after matching. At the same time, Fig. 5 shows that most of the observations of the control group and the treatment group achieved a relatively uniform distribution, achieving the goal of "balanced data". This proves that the PSM-DID method can effectively reduce the deviation of the DID assessment caused by the trend difference. In the speci c matching method, this paper uses one-to-one nearest neighbor matching with a caliper range of 0.05. PSM-DID matching results are shown in column (1) of Table 5. The results are consistent with the DID regression results of Table 4, which further supports the theoretical hypothesis of this study.

Instrumental Variable Method
Although the results estimated by the DID method exclude some of the endogenous problems caused by the omitted variables, the method cannot eliminate the endogenous problem caused by the mutual cause and effect between the CEPL and the comprehensive utilization rate of ISW. In other words, there may be a phenomenon that local governments strengthen the implementation of the CEPL in order to improve the comprehensive utilization rate of local ISW. Therefore, it is necessary to nd a suitable instrumental variable for the implementation of CEPL. According to the previous analysis, this study selected the number of county-level administrative districts under each city as an instrumental variable. The reason is as follows: For the comprehensive utilization rate of ISW in each city, the number of county-level administrative districts under the jurisdiction of prefecture-level cities is basically a xed value, which will not affect the changes in local ISW, satisfying the exogenous assumption of an effective instrumental variable. Regarding whether to strengthen the implementation of the CEPL, the greater the number of county-level administrative districts under the jurisdiction of a prefecture-level city, the more intense the competition for promotion of o cials. Therefore, the greater the number of prefecture-level cities in the city, the more likely it is for local o cials to strengthen the implementation of the CEPL to increase the comprehensive utilization rate of local ISW. The selected instrument variable satis es the correlation assumption of effective instrumental variables.
The regression result of IV estimation is shown in column (2) of Table 5. The Kleibergen-Paap rk LM statistic of IV is 9.878 and is signi cant at a signi cance level of 1%, indicating that there is no problem of insu cient identi cation of instrumental variable. In addition, the Kleibergen-Paap rk Wald F statistic of IV is 10.367, which is greater than the 15% critical value of 8.96, indicating that there is no problem of weak instrumental variables. Furthermore, the regression result of IV estimation is consistent with DID regression results of Table 4, indicating that the CEPL is the reason for the increase in the comprehensive utilization rate of ISW in resource-based cities.

Other Robustness Tests
As the industry of forest industry cities is mainly based on the exploitation of forest resources, we remove it from the sample of resource-based cities to change the composition of the sample, then use the DID method to estimate again. The estimated result is reported in column (3) of Table 5. The estimated coe cient of the core explanatory variable is 0.0676 and is signi cant at a signi cance level of 1%, indicating that the implementation of the CEPL has signi cantly improved the comprehensive utilization rate of ISW in resource-based cities. The estimated result of changing sample is consistent with the result estimated by the benchmark regression.
In addition, considering that technological innovation is an important variable that affects the utilization of ISW, we add the logarithm of the number of green patent applications in each city to the control variables and then use the DID method to estimate again. The estimated result is reported in column (4) of Table 5. The estimated coe cient of the core explanatory variable is 0.0653 and is signi cant at a signi cance level of 1%, indicating that the implementation of the CEPL has signi cantly improved the comprehensive utilization rate of ISW in resource-based cities. The estimated result of changing sample is consistent with the result estimated by the benchmark regression.
Furthermore, since the explained variable, the comprehensive utilization rate of ISW, is a continuous variable between 0 and 1, the results estimated by OLS may not be a consistent estimate. Therefore, we use the Tobit model to re-estimate the model (1). The estimated result is reported in column (5) of Table 5. The estimated coe cient of the core explanatory variable is 0.0506 and is signi cant at a signi cance level of 1%, indicating that the implementation of the CEPL has signi cantly improved the comprehensive utilization rate of ISW in resource-based cities.

Mechanism Analysis
The previous analysis results show that the implementation of the CEPL can signi cantly improve the comprehensive utilization rate of ISW in resource-based cities and this effect is robust. What is the mechanism or process of this effect is also a question worth exploring. As analyzed in the second section of the article, the intensity of environmental regulations may have a moderating effect on this process between CEPL and the comprehensive utilization rate of ISW in resource-based cities. In order to test whether the moderating effect of the intensity of environmental regulations exists, we established the following model: Rate it = β 0 + β 1 ER it * DID + β 2 ER it + β 3 DID + γX + d i + μ t + ϵ it  (4) is consistent with the model (1) and the estimation results of the model (4) are reported in Table 6.  Table 6 shows that the coe cient of the interaction term is 0.034, indicating there is a positive moderating effect of the environmental regulation score on the process of CEPL to the comprehensive utilization rate of ISW in resource-based cities, but this result is not signi cant and there may be measurement errors caused by missing variables. Therefore, in the columns (2) (3) (4) of Table 6, year xed effects, city xed effects, and control variables are added in sequence, the results show that the coe cient of interaction term changed from 0.034 to 0.066 and is signi cant in the level of 5% signi cance level. The results of Table 6 indicate that the stronger the intensity of environmental regulations in resource-based cities, the more obvious the promotion of the CEPL on the comprehensive utilization rate of ISW.

Heterogeneity Analysis
In order to test whether the CEPL has a differential impact on the comprehensive utilization rate of ISW in resource-based cities, this study analyzes the heterogeneity of the resource-based cities' type and the region where the city is located.

Difference In Cities' Type
According to the analysis in the second part of this article, we have estimated four different types of resource-based cities: growing, grow-up, recessionary, and regenerative. The estimation results are reported in Table 7. Column (1) is the estimated result of growing resource-based cities, the estimated coe cient is 0.094 and is not signi cant. Column (2)   Column (4) is the estimated result of northeastern resource-based cities, the estimated coe cient is -0.029 and is not signi cant.
The results indicate that due to the change of the city's geographic location, the effect of the CEPL on the comprehensive utilization rate of ISW in resource-based cities has changed. The main reason for this phenomenon is that there are differences in the main types of resource-based cities in different regions. It can be seen from Fig. 1 that the type of resource-based cities in the central region is mainly grow-up, while the other three regions are diverse in types of cities, covering almost four types of resource-based cities. In the previous heterogeneity analysis, we have proved that in grow-up and recessionary resourcebased cities, the CEPL has signi cantly promoted the comprehensive utilization of ISW. Therefore, in the central region, the CEPL also has a signi cant role in promoting ISW in resource-based cities. In addition, due to the complex types of resource-based cities in the other three regions, the role of the CEPL is not obvious. resource-based cities. In addition, this paper also further analyzes the mechanism and heterogeneity of this in uence. Based on the above analysis, this article draws the following conclusions: (1) The implementation of the CEPL will increase the comprehensive utilization rate of ISW in resourcebased cities. The empirical results of the DID model show that when other conditions remain unchanged, after the implementation of the CEPL, the comprehensive utilization rate of ISW in resource-based cities has been signi cantly increased. After selecting instrumental variable, changing the estimation model, using PSM + DID and other methods to re-estimate, the results are still robust.
(2) After analyzing the mechanism, it was found that the higher the city's environmental regulation score, the more obvious the effect of the CEPL on the comprehensive utilization rate of ISW. This is mainly because the higher the environmental regulation score of a city, the stronger the environmental law enforcement of the city, the more likely it is to ensure the smooth implementation of the CEPL in the local area.
(3) The promotion effect of CEPL on comprehensive utilization rate is heterogeneous: From the perspective of resource-based cities, the CEPL has a signi cant effect on the comprehensive utilization rate of ISW in grow-up and recessionary resource-based cities, but it has not signi cant promotion effect on growing and regenerative resource-based cities; from the perspective of different region, the CEPL has a signi cant effect on the comprehensive utilization rate of ISW in resource-based cities in the central region, but this effect is not obvious in the eastern, western and northeastern regions of China.

Implications
Based on the above research results, the following policy implications are further proposed.
(1) To improve the level of solid waste management in cities, environmental policies and regulations are indispensable tools. The market-led solid waste management sometimes fails due to the defects of the market itself and the government needs to formulate relevant policies and regulations as a supplement to improve the level of municipal solid waste management.
(2) Environmental law enforcement is the cornerstone of ensuring the effectiveness of policies and regulations. The stronger the environmental law enforcement, the more obvious the role of policies and regulations in improving the level of solid waste management. Therefore, the government should strengthen environmental law enforcement to ensure the implementation of relevant policies and regulations.
(3) To ease the pressure on resources, speeding up the industrial transformation of resource-based cities is the fundamental way. Local governments should take into account local conditions and formulate sustainable development plans that are in line with local conditions.
The contribution of this research to the literature on ISW management is to enrich the theoretical foundation of the research on the factors affecting the management of municipal solid waste. It has a strong reference value for the practice of municipal solid waste management. Moreover, this study provides new ideas for changing the urban solid waste management model and realizing the "win-win" between the economy and the ecological environment. That is, in addition to the market and technical means, strong policies, and regulations are also effective tools to improve the level of municipal solid waste management.
Nevertheless, limitations exist. First, Although the robustness test was carried out by changing the sample, selecting the instrumental variables, and changing the estimation method, etc., however, there may be some important variables that have not been considered and have not been controlled. Besides, although this study analyzes the impact of CEPL on the comprehensive utilization rate of ISW in resource-based cities and its impact mechanism, the analysis is not comprehensive due to there may be other mechanisms that have not been considered. Future studies should extend the framework to a more comprehensive context.

Statements And Declarations Funding Declaration
This study is supported by the National Social Science Foundation of China (No. 20XJL013).

Con ict Interest
The authors declare that there are no con icts of interest. Figure 1 Distribution of resource-based cities   Variables' standardized deviation Common support for propensity scores.