The Effect of Social Capital on Environmental Pollution in China-Suppression or Promotion?

The 19th National Congress of the Communist Party of China clearly regards the prevention and control of environmental pollution as one of the "three key battles" to build a well-off society. This paper analyzes the relationship between social capital and environmental pollution from both theoretical and empirical perspectives. From the theoretical perspective, social capital has two opposite effects on environmental pollution: the suppression and the promotion. The former indicates that the improvement of social capital level reduces the cost of residents' boycott to pollution and reduces pollution emissions, while the latter manifests that the improvement of social capital worsens environmental pollution due to the ability of polluting enterprises to withstand residents' boycott. Based on the panel data of China from 2008 to 2016, the empirical results show that social capital has inverted U-shaped characteristics on environmental pollution. Low level of social capital will increase pollution emissions and only when social capital reaches a certain level can it be beneficial to environmental protection. This paper attempts to better understand the functions of social capital in environmental governance and provides constructive proposals on how to exert the governance role of social capital on environmental protection for policy makers. Regions with higher levels of social capital should exert the suppression effect of social capital and regions with low levels should focus on improving the level of social capital, while formal regulation means shall be adopted to control pollution.