Role of green finance and investment in sustainable resource development in China

Abstract

This research employs the Autoregressive Distributed Lag (ARDL) method to evaluate the effects of the size of the green finance market on the generation of wind power, solar power, and hydropower in China from 1990 to 2021. The empirical findings indicate that a 1% increase in the size of the green finance market is associated with a nearly 0.47% increase in wind power generation, a 0.36% increase in solar power generation, and a 0.15% increase in hydropower generation in China. Several control variables, including the Consumer Price Index (CPI), exhibit a negative impact on renewable energy sources in the short term, while China's Gross Domestic Product (GDP), small and medium-sized enterprises (SMEs), and foreign direct investment (FDI) have positive effects. In the long run, the size of the green finance market remains crucial for the development of renewable energy, with wind power demonstrating a more significant influence. To promote green finance and sustainable energy in China, practical policies could involve the digitalization of green finance markets, the establishment of sustainable education programs to enhance public awareness of green initiatives, the improvement of regulations governing green FDI, and the utilization of technologies such as big data, artificial intelligence (AI), and financial technology (fintech) to enhance green investments.