This article examines the effects of trade and investment liberalization on the environment in two Chinese cities—Shenyang and Dalian. Theoretically, it draws insights from literature on trade and environment on one hand, and norm diffusion study in the international relations literature on the other hand. It attempts to show that economic openness has played a significant role in facilitating the diffusion of global environmental norms in China. In addition, it examines how global economic integration shapes the ways in which major actors in the environmental policy process interact, change their perceptions, and thus find ways to minimize risks and maximize benefits of globalization. Contrary to the race-to-the-bottom hypothesis, this article finds that economic openness positively affected domestic environmental policy by providing the necessity and opportunities for strengthening environmental institutions.
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