Sustainable Industrial Development in China: Decomposition of Green Total-Factor Productivity and Identification of Innovative Provinces

Green development has become a strategic imperative for China amid increasing environmental constraints and economic restructuring, representing a critical pathway toward industrial sustainability. This study develops a global Malmquist index framework based on a slacks-based measure under the assumption of variable returns to scale to evaluate the dynamic evolution of industrial green total-factor productivity (GTFP) in 30 Chinese provinces from 2006 to 2022. To identify the key drivers of changes in GTFP, the index is decomposed into pure technical efficiency, scale efficiency, and technological change components. The empirical findings yield four main insights. First, the distribution of green development efficiency shifted from a relatively uniform pattern during the 11th and 12th Five-Year-Plan periods to a pyramid-shaped distribution during the 13th Five-Year-Plan period, indicating growing regional disparities. Second, China’s industrial GTFP exhibited a consistent downward trend over the study period, primarily attributable to deteriorations in pure technical and scale efficiencies, despite the positive contributions from technological progress. Third, we observe a structural risk of a central lag in GTFP: the eastern provinces demonstrate superior pure technical efficiency, while the western provinces exhibit relatively higher scale efficiency. By contrast, technological progress appears spatially balanced. Fourth, industrial innovation is not prominent during the periods 2018–2019 and 2021–2022. These findings have policy implications for promoting regional coordination and enhancing innovation-driven strategies to advance China’s green industrial transformation.