Provincial-industrial heterogeneity and drivers of green total factor productivity: Evidence from China's industrial sector

This study investigates an apparent “Green Productivity Paradox” in China's industrial sectors: despite steady growth in green total factor productivity (GTFP), capital deepening—a hallmark of industrial development—has paradoxically suppressed GTFP. Using 2001–2021 panel data for 33 sectors across 30 provinces, this paper apply Malmquist-Luenberger decomposition, Dagum Gini coefficient and dynamic GMM. Results show China's industrial GTFP rose moderately (mean = 1.113), with eastern (1.148) and central (1.137) regions outperforming the west (1.073), and light-polluting sectors (1.145) exceeding heavy-polluting ones (1.051). Growth is driven mainly by technical efficiency (TE) and technological innovation (TEC). Capital deepening negatively affects GTFP, especially in non-energy-intensive sectors, non‑carbon trading pilot cities, western regions, and both high- and low-capital-intensive industries. Spatial inequality widened (Gini: 0.018 → 0.102), dominated by regional and inter-sectoral gaps, with “strong-get-stronger” polarization between high-tech and traditional sectors, where intra-group divergence has become the main source of disparity (contributing over 62% post-2006). Mechanism analysis reveals capital deepening suppresses GTFP mainly by raising energy intensity and hindering technological progress, weakening their positive contributions to green growth, while the technical efficiency channel shows no significant transmission effect. Premature capital deepening fails to boost green productivity despite GTFP growth, supporting the Environmental Kuznets Curve only in certain transition periods. These findings highlight that differentiated policies targeting regional, sectoral and developmental differences are needed to resolve the paradox and promote coordinated green industrial transformation.