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Analyzing the impact of supply chain and digitalization in the Chinese economy: What is the role of energy consumption, government expenditure, and industrialization in environmental pollution?

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  • Xiu, Guangli

Abstract

The handling and transportation of products also contribute to the emission of air pollution, even though the use of technology assists in keeping it to a minimum level. To further delve into this aspect, this study aims to examine how energy consumption, supply chain, digitalization, government final consumption expenditure, industrialization, and economic development impact air pollution emissions in China's economy. For this purpose, the study employed Kernel Regularized Least Squares (KRLS) and quantile-on-quantile regression from 1995 to 2023. The KRLS findings depict that energy consumption, supply chain, and digitalization negatively impact air pollution emissions, emphasizing the need for sustainable practices in the Chinese economy. However, government expenditure, industrialization, and economic development have a positive influence, intensifying their impacts on air pollution at higher levels. Similar results observed in quantile-on-quantile regression, energy consumption, and government expenditure tend to have the adverse effects observed when a higher level of air pollution coincides. Digitalization has been observed to mitigate some of the harmful effects of air pollution, highlighting a helpful interaction under certain conditions. Industrialization in construction has a positive relationship with air pollution, indicating that increased industrial activity may raise higher air pollution levels. The overall impact of economic development is negative, with higher levels of air pollution. Based on these findings, the policy implementation should focus on improving digitalization for pollution reduction, increasing energy efficiency, and sustainable supply chain management. Moreover, it is necessary to combine environmental objectives with industrial ones, especially in the construction sector, where economic growth should occur without violating the principles of environmental protection.

Suggested Citation

  • Xiu, Guangli, 2025. "Analyzing the impact of supply chain and digitalization in the Chinese economy: What is the role of energy consumption, government expenditure, and industrialization in environmental pollution?," Energy Economics, Elsevier, vol. 145(C).
    • Handle: RePEc:eee:eneeco:v:145:y:2025:i:c:s0140988325002361
    DOI: 10.1016/j.eneco.2025.108412
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