How China is fostering sustainable growth: the interplay of green investment and production-based emission.

Abstract

To mitigate environmental problems and to achieve sustainability, China is striving to transition to low-carbon urban economies. Among several significant steps, the country has made remarkable success in controlling the emissions from transportation, buildings, and energy by shutting down or relocating several polluting industries. This study contributes to the issue of sustainable growth debate using time series data from China for the period 1998-2017 and empirically examines the effects of green investment and renewable energy consumption on production-based carbon emissions for China. The strength of this study is that it tested some new variables such as production-based carbon emissions and green investment. Using autoregressive distributed lag model (ARDL) cointegration technique, we found that production-based emission and its determinants move together in the long run. The study found that green investment and renewable energy consumption are both helpful in controlling production-based carbon emissions, while trade openness increases production-based carbon emissions. Hence, green investment and renewable energy consumption contribute to the achievement of sustainable growth. Moreover, based on a robustness check, human capital, financial development, and environment-specific technological innovation are found to be helpful in curbing production-based carbon emissions. Our study recommends financial technology (fin-tech), green investment, and public-private partnership investment in renewable energy to mitigate the effect of production-based carbon emissions.