Abstract: Since the reform and opening up, China's economy has achieved remarkable achievements in the world, but at the same time, China also faces the dual pressure of increasingly serious corruption and deteriorating environment, which has seriously affected the sustainable development of China's economy. Many studies have shown that the degree of corruption in a country has an important impact on environmental quality. But researches on the effect of corruption on environmental pollution usually ignore the influence of informal economy. The informal economy may affect the relationship between corruption and environmental pollution. Therefore, first of all, by constructing a theoretical model based on pollution of production sectors, the effect of corruption and the size of the informal economy on environmental pollution are studied theoretically. Secondly, by utilizing the provincial panel data from 1998 to 2016 in China, system GMM estimation method is used to empirically examine the effect of corruption, the size of the informal economy and the interaction between them on environmental pollution in China. The theoretical results show that on the one hand corruption decreases environmental pollution through reduction of formal economic activity; on the other hand, corruption increases environmental pollution through the expansion of informal economic activity. The empirical results show the total effect of corruption on environmental pollution in China is significantly negative and the effect of the interaction between corruption and the size of the informal economy on environmental pollution in China is significantly positive. In addition, it is confirmed that the effect of the informal economy on environmental pollution is significantly positive and corruption exacerbates the effect of the informal economy on environmental degradation. Overall, the effect of corruption on China's environmental pollution is positive and corruption has deteriorated China's environmental quality. The research helps us understand the mechanism of the influence of corruption and the informal economy on China's environmental pollution and it has important practical significance for China to maintain the coordinated development of economy, society and environment.

Key words: corruption, the informal economy, environmental pollution