Abstract
In China, air pollution, especially fine particulate matter (PM2.5) pollution, has become increasingly serious with the rapid economic growth that has occurred over the past 40 years. This paper aims to introduce PM2.5 pollution as a constraint in the environmental efficiency research framework through the use of panel data covering the Chinese provinces from 2001-2018. PM2.5 environmental efficiency is measured with the slack-based measure (SBM)-Undesirable-variable returns-to-scale (VRS) model, and the results show that the average PM2.5 environmental efficiency score is 0.702, which indicates inefficiency, and is U-shaped over time. The PM2.5 environmental efficiency scores are unbalanced across the eight regions and 30 provinces of China. Additionally, the relationship between PM2.5 environmental efficiency and its influencing factors is examined with a tobit model, and the empirical findings indicate that the relationship between economic development and PM2.5 environmental efficiency is an inverted U, which is the opposite of the traditional environmental Kuznets curve (EKC). In addition, technological innovation, trade dependency, and regional development each have a significantly positive effect on PM2.5 environmental efficiency. However, environmental regulations, the industrial structure, and population density have significantly negative effects on PM2.5 environmental efficiency. Finally, this paper fails to prove that foreign direct investment (FDI) has created a PM2.5 "pollution haven" in China.