Exploring impact of green finance and natural resources on eco-efficiency: case of China

Abstract

China ranks 160 out of 180 countries in terms of ecological efficiency, with an EPI score of 28.40 and a 10-year average change in score of 11.40. This article examines the impact of green finance and China’s natural resources on regional ecological efficiency using the Tobit regression model. The study uses the average yearly exchange rate to normalize dollar-related values and GDP to 2012 RMB using the price deflator. Variables used as explanatory tools include green financing, the availability of natural resources, and regional eco-efficiency. The results of the study imply that natural resources in eastern region of China are better managed as and have avoided the resource curse as compared to central and western regions. Resources temporarily support area economic and social growth. However, resource agglomeration locks many elements in the resource industry and degrades regional industrial development, generating environmental and social difficulties that may hinder regional economic progress. Given that Foreign Direct Investment (FDI) increases regional eco-efficiency after accounting for adjustment. The FDI positively correlated with ecological efficiency in the east zone, while central and western zones have negative correlations. The industrial development of the nation negatively impacts ecological efficiency in the East, Midwest, and West regions. Western results are distinctive, with ecological efficiency and regional economic growth frequently going hand in hand.