Reshaping China’s Inclusive and Sustainable Growth Landscape Through Green Energy Innovation in the Digital Era

Abstract

China faces increasing pressure to obtain inclusive and sustainable growth as it is one of the largest producers of carbon dioxide (CO2) emissions globally. This paper aims to simplify the trend of inclusive and sustainable growth in China by focusing on the impact of green energy technology, financial development, structural transformation, digital economy and public sector corruption as the determining factors. The study adopts a sample period from 1990 to 2018. It employs advanced dynamic autoregressive distributed lag (ARDL) model techniques with counterfactual shocks and a kernel regularized least squares regression machine learning algorithm. The findings reveal that green energy technology positively and significantly affects China’s inclusive and sustainable growth in the long run. However, the short-run coefficient of the dynamic ARDL model reveals an insignificant outcome. In addition, digital economy is found to be adversely affecting inclusive and sustainable growth in both the short run and long run, yet insignificantly. The role of financial development is found to be favorable in the short run, while structural transformation does not have any significant impact on inclusive and sustainable growth in either the short or long-run. Public sector corruption significantly and negatively hurts inclusive and sustainable growth in the short run. Based on the results, policy recommendations are suggested to boost green energy technology and inclusive and sustainable development in China. © The Author(s), under exclusive licence to Springer Nature B.V. 2024.