On the criticality of renewable energy to sustainable development: Do green financial development, technological innovation, and economic complexity matter for China?

Abstract

The current era faces the devastating threats of global warming than what is evident in the pre-industrial age. Efforts toward resolving these environmental issues have heightened the calls for pro-green policy measures in which renewable energy and green finance stand out. Consequently, this study examines the impact of renewable energy, green finance, technological innovation, and economic complexity on sustainable development captured by sustainable economic growth and carbon neutrality in China. The empirical model endogenizes the role of natural resource dependence and human capital. The analysis is based on annual time series data from 1996 to 2018 estimated using autoregressive distributed lag (ARDL) model. The empirical results reveal that renewable energy (RE) and technological innovations (TECIN) are fundamental factors whose engagement is not negligible if the other indicators must provide desirable and consistent growth and environmental effects that support sustainable development. In particular, the essential roles of green finance on sustainable development are empirically confirmed for China. Interestingly, the robustness analyses conducted provided substantial backings for the main results. Practical policy implications leading to the sustenance of green finance, renewable energy, and technological innovation for driving sustainable development in the Chinese economy are formulated based on empirical results.