Abstract
The report to the 20th National Congress of the Communist Party of China highlighted the necessity of advancing a new type of urbanization with people at the core. Characteristic towns as an essential link between new urbanization and rural revitalization attach great importance to creating a beautiful environment. Sewage treatment is an indispensable foundation for a town's high-quality economic and social development; however, it may be hard to achieve through urban construction. Therefore, using data from 584 organic towns in Chongqing, a typical mountainous city in western China, this study empirically analyzes the effect of the characteristic town policy in China on mountainous sewage treatment and its mechanisms from 2014 to 2020. The results indicate that (1) the characteristic town policy helps enhance sewage treatment in small towns, which remains valid after a series of robustness tests. (2) Investment and human resource effects are mediators for the characteristic town policy to boost sewage treatment in small towns. Further analyses reveal that the boosting effect of the characteristic town policy on small-town sewage treatment is more significant for small towns with higher economic development levels suffering ecological and environmental pressures. These findings provide a basis for a broad recognition of the effect of the characteristic town policy and its impact. They also theoretically enrich the awareness of the Chinese government's urbanization policy concerning the economy and society.