The role of green financing in enabling sustainable energy transition and economic development

The study’s overarching objective is to evaluate FDI’s contribution to China’s renewable energy sector and the country’s ongoing energy transformation. The industrial sector of China’s economy is contributing enormously to the country’s overall growth. The primary goal of this research is to examine the impact of asymmetric positive–negative shocks on China’s economic development via the lenses of measurements of industrial value-added, FDI, technical innovation, and natural assets. Empirical short-run and long-run asymmetric estimations using N-ARDL are performed using indicator data from 1986 to 2019. The results show that industrial value-added contributes to economic development when a positive shock occurs but has the opposite impact when a negative shock occurs. Technology innovation is also a good factor in achieving economic development, whether the shock is positive or negative. Short- and long-term impacts of FDI and financial innovation rents are neutral when a positive shock occurs but negative when an unfavorable shock occurs. The short-term/long-term difference is now more stable with the addition of the error correction term. A novel equilibrium equation shown via symmetric multiplier graphs may represent asymmetrical adjustments to economic growth in response to positive and negative shocks. Proposals based on results urge the government and policymakers to focus on heavy and secondary sectors, policies that rely heavily on technology, and the use of renewable resources.