The nexus between digital economy and carbon dioxide emissions in China: The moderating role of investments in research and development

Abstract

Since the signing of the Paris Agreement, it is necessary for the signatories to report their nationally determined contributions regarding the adoption of domestic strategies that are to be adopted to achieve emission-reduction commitments. Accordingly, the Chinese government has also declared the target of turning carbon-neutral by 2060. In this regard, the digitalization of the Chinese economy can be hypothesized to attain the carbon-neutrality agenda since an emerging digital economy has immense potential in ensuring environmentally-sustainable economic growth. Besides, it is also argued that investments in research and development can also facilitate this cause by developing the latest technologies that can limit emissions of carbon dioxide in China. Against this backdrop, this study aimed to check whether digitalization and research and development investments can help China achieve low carbon growth. In this regard, this study utilized annual data of 30 Chinese provinces between 2006 and 2017. The findings revealed long-run cointegrating relationships between carbon dioxide emissions, digitalization, research and development investments, and other major macroeconomic variables. Besides, digitalization is found to curb the provincial emission figures. Moreover, research and development investments are evidenced to not only curb the emission levels but also perform the role of a moderator between digitalization and carbon dioxide emissions. Similar direct and moderating effects of technological innovation are also discovered. Furthermore, economic growth, financial development, and energy use boost higher carbon dioxide emissions in China. In light of these findings, this study recommends the Chinese government integrate the digitalization and environmental development policies by enhancing investments in research and development. In addition, China should also look forward to green its economic growth, financial development, and energy transition policies.