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How Do Green Finance Policy and Green Innovation Interact With Carbon Productivity in China?

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  • Wenxi Wang
  • Jia Wei

Abstract

In the context of mounting global climate challenges and Chinaʼs pursuit of its “dual carbon” goals, it is of great practical and theoretical importance to understand how policy instruments and technological drivers can improve carbon productivity together. This paper examines the relationship between green finance policy, green innovation, and carbon productivity using Chinese provincial data. Using the Westerlund cointegration test and the PMG estimation method, the paper aims to determine the equilibrium interaction among the variables. The results show that green finance policy and green innovation both contribute to enhanced carbon productivity. However, both factors have a restraining effect on carbon productivity in the short term. In the subsample analysis, both factors significantly promote long‐term growth in carbon productivity in all regions. However, the short‐term effect of green finance policy is insignificant in the central region. Our findings imply that green finance policies are crucial to enhancing carbon productivity and highlight the need for regionally differentiated and temporally aware policy design.

Suggested Citation

  • Wenxi Wang & Jia Wei, 2026. "How Do Green Finance Policy and Green Innovation Interact With Carbon Productivity in China?," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 13(2), May.
    • Handle: RePEc:bla:asiaps:v:13:y:2026:i:2:n:e70082
    DOI: 10.1002/app5.70082
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