Abstract: Overcapacity is an urgent problem to be solved in the process of high-quality economic development in China. The management of overcapacity not only needs to subtract from the "quantity" of production capacity, but also pay more attention to the improvement of the "quality" of production capacity. In order to explore whether environmental regulation can reduce backward production capacity while promoting the formation of high-quality production capacity, firstly, data envelopment analysis (DEA) was used to estimate the capacity utilization rate of 264 cities in China from 2005 to 2018, and it was found that in the past 14 years, China's cities were basically in a state of overcapacity. Secondly, a comprehensive index of high-quality production capacity is constructed from the three dimensions of stable growth, technological innovation and green transformation, which is used to measure the improvement of production capacity quality. Finally, through threshold regression analysis, it is found that environmental regulation has a positive effect on capacity utilization and high-quality production capacity, especially "medium-strong" environmental regulation can reduce backward production capacity while promoting the transformation of low-end production capacity to high-quality production capacity, and "strong", "medium-weak" and "weak" environmental regulation is not conducive to the collaborative governance of "quantity" and "quality" of production capacity.

Keywords: environmental regulation; overcapacity management; High-quality production capacity; capacity utilization; Threshold effect