Analyzing the effects of financial deepening, smart urbanization, rural development, and digital economy on green growth in China within the framework of carbon neutrality targets

Abstract

For the sustainable future of the world, achieving carbon neutrality is crucial. Most of the countries are making fundamental changes in their economic models so that they can become carbon neutral by the year 2050. In this regard, green growth should be the preferred model for most economies in the world. The literature on green growth is growing, but no past study has shed light on how financial deepening, smart urbanization, rural development, and digital economy impact green growth within the framework of carbon neutrality targets. Thus, there exists a significant gap in the literature, which motivates to conduct this analysis. The primary motive of this study is to analyze the asymmetric impact of financial deepening, smart urbanization, rural development, and digital economy on green growth within the framework of carbon neutrality targets. Empirical estimates are obtained by utilizing the nonlinear autoregressive distributed lag framework. The results confirm that positive changes in financial deepening, smart urbanization, ICT, and rural development help promote long-term green growth. The negative changes in financial deepening hinder green growth in the long-run, while the negative changes in smart urbanization, information and communication technology (ICT), and rural development do not significantly impact green growth in the long-run. In the short-run, only the positive changes in financial deepening and ICT promote green growth, while the rest of the estimates are insignificant. The results imply that financial deepening, smart urbanization, ICT, and rural development are vital in achieving carbon-neutrality objectives by fostering green growth. Thus, policymakers should rely on the green growth framework to achieve net zero carbon emissions.