Intelligent Manufacturing and Carbon Reduction: Evidence from China’s “Made in China 2025” Initiative

The manufacturing sector’s significant contribution to global carbon emissions necessitates effective decarbonization. This study evaluates the causal effect of exposure to China’s “Made in China 2025” (MIC) initiative, an industrial policy promoting intelligent manufacturing, on firms’ estimated carbon emissions by exploiting the policy as a quasi-natural experiment. Employing a Difference-in-Differences (DID) model on a panel of Chinese A-share manufacturing firms from 2011 to 2022, we find that exposure to the MIC policy is associated with an approximately 0.5% reduction in firms’ estimated carbon emissions. Although the reduction appears modest at the firm level, its aggregate effect may be substantial given the large scale of China’s manufacturing sector. Various robustness checks confirm the validity and persistence of this effect. Crucially, the environmental benefits are heterogeneous, showing stronger effects in competitive, technology-intensive, and labor-intensive sectors compared to capital-intensive ones. Mechanism analysis reveals that exposure to the MIC policy promotes substantive green innovation, accelerates digital transition through process optimization, and significantly enhances energy efficiency, thereby contributing to lower estimated firm-level carbon emissions. These findings underscore the potential role of intelligent-manufacturing-oriented industrial policies in reconciling industrial growth with climate mitigation and provide micro-level evidence on the environmental effects of policy-induced intelligent manufacturing transformation, extending a literature that has largely focused on economic outcomes. The results also suggest that policymakers should further promote intelligent manufacturing and design sector-specific green technology support policies, particularly for capital-intensive sectors where carbon-reduction effects appear relatively weaker, to maximize carbon reduction benefits.