Trade protection and environmental protection are two important issues concerning sustainable economic development in China. In order to examine the relationship between them, the paper firstly endogenizes firms’ choices between high and low-pollution production technology and then establishes a theoretical framework by incorporating the feature of adoption and updating low-pollution production technology into an infant industry protection model. Next, we utilize the 1998~2012 Chinese Industrial Enterprise Database to empirically test theoretically-derived hypotheses from three perspectives of the frequency, scope, and strength of protection policies. The conclusion is that higher frequency and wider scope increase the intensity of pollution monotonically, while the strength of non-tariff barriers exhibits a U-shaped relationship with pollution intensity. Moreover, this U-shaped pattern becomes more prominent for non-state-owned enterprises, firms located in the central and western regions of China, and firms operating in high-polluting industries. Production technology is the key influence mechanism linking government policy and enterprise behavior. Short-term, reasonable non-tariff barriers will promote technological development and reduce enterprise pollution emissions, but continued increased protection will disincentivize enterprises with respect to production efficiency improvement, which is counterproductive. Our research hence provides policy implications for the Chinese government regulators, who are committed to trade liberalization and energy conservation, and also for the Chinese industry system, which is in a critical period of deepening reform.