Green Fiscal Policy and Sustainable Transformation: Stimulating Environmental Innovation and Competitiveness in China
Zhengfu Xie, Ran Tao, Rahil Irfan Ahmed, Quratulain Zafar
Keywords:
Green fiscal policy, Environmental innovation, Green innovation, ARDL, QARDL, Sustainable competitiveness, China
Abstract:
Green innovation is central to achieving sustainable environmental and economic transformation in China. This study examines the impact of green fiscal policy on green innovation in China over the period 1991–2020. Green fiscal policy is measured using two fiscal instruments: environment-related taxes and research and development (R&D) expenditure. Using the autoregressive distributed lag (ARDL) approach, the results show that environment-related taxes and R&D expenditure positively influence green innovation in China. As a robustness check, the quantile autoregressive distributed lag (QARDL) model indicates that environment-related taxes promote green innovation across quantiles, whereas R&D expenditure has a stronger long-run effect mainly at higher quantiles of green innovation. The findings provide policy-relevant evidence that well-designed fiscal instruments can stimulate environmental innovation and support China’s sustainable transformation and long-run competitiveness.
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 Green Fiscal Policy and Sustainable Transformation: Stimulating Environmental Innovation and Competitiveness in China [PDF file] [Filesize: 560.91 KB]
 10.7441/joc.2026.SI.16
Xie, Z., Tao, R., Ahmed, R. I., & Zafar, Q. (2026). Green Fiscal Policy and Sustainable Transformation: Stimulating Environmental Innovation and Competitiveness in China. Journal of Competitiveness, 18(SI 2), 171–186. https://doi.org/10.7441/joc.2026.SI.16
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