Industrial structure upgrading is a key measure to deepen economic structure adjustment and promote the construction of ecological civilization. The implementation of the River Chief System poses a major threat to polluting enterprises

forcing enterprises to adjust their production structure

so as to force industrial structure transformation and upgrading. Taking the River Chief System as a quasi-natural experiment

based on the panel data of 108 prefecture level and above cities in the Yangtze River Economic Belt from 2004 to 2019

this paper uses the spatial difference in difference model (SDID) to empirically test the causal effect of the River Chief System on the upgrading of industrial structure. It is found that the strict environmental regulation brought by the River Chief System does not make the polluting enterprises “wait to die”

but stimulate the vitality of industrial innovation and adjust the production structure for “Nirvana and rebirth”

so as to promote the upgrading of the industrial structure of the Yangtze River Economic Belt

and has a more significant effect on the upgrading of the industrial structure in developed areas and the lower reaches of the Yangtze River. At the same time

the River Chief System will not only have a positive impact on the upgrading of industrial structure in the region

but also promote the upgrading of industrial structure in surrounding areas

and its policy effect will have more positive spillovers to regions with relatively short geographical distance. In addition

the upgrading of industrial structure shows a significant positive spatial correlation in the Yangtze River Economic Belt. The upgrading of industrial structure in this region will have a significant positive impact on the upgrading of industrial structure in surrounding areas.