IDEAS home Printed from https://ideas.repec.org/a/pal/palcom/v12y2025i1d10.1057_s41599-025-04429-3.html
   My bibliography  Save this article

Green finance market and carbon neutralization capacity in China

Author

Listed:
  • Yanqiang Lou

    (Huainan Normal University)

Abstract

This study employs quarterly data and the ARDL approach to explore how the growth of the green finance market influences China’s carbon neutralization capacity from 1995Q1 to 2021Q4. Findings indicate that a 1% rise in green finance market value is associated with a 0.25% increase in short-term and a 0.31% increase in long-term carbon sequestration capacity. Similarly, a 1% improvement in Environmental, Social, and Governance (ESG) investment boosts carbon neutralization capacity by 0.19% in the short term and 0.26% in the long term, demonstrating the role of ESG practices in reducing emissions. Additionally, a 1% increase in green energy production enhances carbon neutralization capacity by 0.24% in the short term and 0.17% in the long term, emphasizing the importance of renewable energy sources. However, the analysis also reveals that GDP per capita and trade liberalization negatively impact carbon sequestration, highlighting the need for sustainable development approaches. Policy recommendations include fostering carbon-neutral bonds, standardizing green bonds, supporting ESG investments, prioritizing green growth strategies, and advancing green trade policies.

Suggested Citation

  • Yanqiang Lou, 2025. "Green finance market and carbon neutralization capacity in China," Palgrave Communications, Palgrave Macmillan, vol. 12(1), pages 1-8, December.
    • Handle: RePEc:pal:palcom:v:12:y:2025:i:1:d:10.1057_s41599-025-04429-3
    DOI: 10.1057/s41599-025-04429-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41599-025-04429-3
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s41599-025-04429-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Naoyuki Yoshino & Ehsan Rasoulinezhad & Farhad Taghizadeh-Hesary, 2021. "Economic Impacts of Carbon Tax in a General Equilibrium Framework: Empirical Study of Japan," Journal of Environmental Assessment Policy and Management (JEAPM), World Scientific Publishing Co. Pte. Ltd., vol. 23(01n02), pages 1-25, June.
    2. Abdul Gafoor, C.P. & Perumbalath, Shamshadali & Daimari, Phungkha & Naheem, K.T., 2024. "Trends and patterns in green finance research: A bibliometric study," Innovation and Green Development, Elsevier, vol. 3(2).
    3. Xiong, Wei & Jiang, Mengzhen & Tashkhodjaev, Mukhtorkhon & Pashayev, Zohrab, 2023. "Greening the economic recovery: Natural resource market efficiency as a key driver," Resources Policy, Elsevier, vol. 86(PB).
    4. Lin, Boqiang & Zhou, Yicheng, 2022. "Measuring the green economic growth in China: Influencing factors and policy perspectives," Energy, Elsevier, vol. 241(C).
    5. Alharbi, Samar S. & Al Mamun, Md & Boubaker, Sabri & Rizvi, Syed Kumail Abbas, 2023. "Green finance and renewable energy: A worldwide evidence," Energy Economics, Elsevier, vol. 118(C).
    6. Yang, Xiaoyun, 2023. "Role of green finance and investment in sustainable resource development in China," Resources Policy, Elsevier, vol. 86(PA).
    7. Guo, Yating & Rosland, Anitha & Ishak, Suryati & Muhammad Senan, Mohammad Khair Afham, 2023. "Public spending and natural resources development: A way toward green economic growth in China," Resources Policy, Elsevier, vol. 86(PB).
    8. Hussain, Jafar & Lee, Chien-Chiang & Hu, Danting, 2023. "Maximizing load capacity factor through a carbon-neutral environment via a simulation of carbon peak," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 746-764.
    9. Zhao, Linhai & Rasoulinezhad, Ehsan, 2023. "Role of natural resources utilization efficiency in achieving green economic recovery: Evidence from BRICS countries," Resources Policy, Elsevier, vol. 80(C).
    10. Hua, Mingzhong & Li, Zhe & Zhang, Yudong & Wei, Xiaobei, 2024. "Does green finance promote green transformation of the real economy?," Research in International Business and Finance, Elsevier, vol. 67(PB).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yujing Pan & Yifei Zhou, 2025. "Can Carbon Neutrality Promote Green and Sustainable Urban Development from an Environmental Sociology Perspective? Evidence from China," Sustainability, MDPI, vol. 17(9), pages 1-18, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yarong Shi & Bo Yang, 2025. "Green finance instruments and empowering sustainability in East Asian economies," Palgrave Communications, Palgrave Macmillan, vol. 12(1), pages 1-9, December.
    2. Yu, Qinyao & Zuo, Xiangbin & Ding, Huanhuan & Yin, Xunyang, 2024. "Resource rent, economic stability and the legal landscape of China's green growth," Resources Policy, Elsevier, vol. 89(C).
    3. Yunfeng Shang & Yuanjie Pu & Yiting Yu & Nan Gao & Yun Lu, 2023. "Role of the e-exhibition industry in the green growth of businesses and recovery," Economic Change and Restructuring, Springer, vol. 56(3), pages 2003-2020, June.
    4. Cheng Jin, 2025. "Investigating the intersection of ESG investing, green recovery, and SME development in the OECD," Palgrave Communications, Palgrave Macmillan, vol. 12(1), pages 1-8, December.
    5. Zhang, Xiaoyu & Xi, Yanling, 2024. "Green finance, private investments and fossil fuels rents," Resources Policy, Elsevier, vol. 99(C).
    6. Li, Dongxia, 2024. "Green finance, fossil fuel efficiency, and sustainable development in OECD," Resources Policy, Elsevier, vol. 98(C).
    7. Li, Xinqiang & Wang, Cheng, 2024. "Clean Energy's influence on the mineral resource market in the ASEAN region," Resources Policy, Elsevier, vol. 91(C).
    8. Xu, Jin & Liu, Chengjun & Dou, Gang & Cai, Yunfei, 2024. "Mineral resource management in Chinese rural areas: Policy assessment for green economic growth," Resources Policy, Elsevier, vol. 90(C).
    9. Hu, Nan & Zheng, Bing, 2023. "Natural resources, education, and green economic development," Resources Policy, Elsevier, vol. 86(PB).
    10. Dai, Xiajing & Zhang, Junjie, 2024. "China's green development journey through resource rent optimization and green finance policies," Resources Policy, Elsevier, vol. 90(C).
    11. Xu, Jiaqi & Zhao, Jingfeng & Liu, Wen, 2023. "A comparative study of renewable and fossil fuels energy impacts on green development in Asian countries with divergent income inequality," Resources Policy, Elsevier, vol. 85(PA).
    12. Sheng Xu & Weiyu Gu, 2024. "Dual carbon economy modeling in advanced economies," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-8, December.
    13. Mao, Qian & Li, Yilong, 2024. "Blockchain evolution, artificial intelligence and ferrous metal trade," Resources Policy, Elsevier, vol. 98(C).
    14. Nie, Peng & Zhong, Juncheng & Ren, Zhengliang & Huang, Jinglei, 2024. "Sustainable financing solutions for the growth of resource-driven economies in the digital economy age," Resources Policy, Elsevier, vol. 98(C).
    15. Jingbing Sun & Youmu Xie & Sheng Zhou & Jiali Dan, 2024. "RETRACTED ARTICLE: The role of solar energy in achieving net-zero emission and green growth: a global analysis," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-16, April.
    16. Chunyang Wang & Qianqian He & Jian Xu, 2024. "RETRACTED ARTICLE: Exploring the role of quality and inclusive education in meeting sustainable development goals," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-15, June.
    17. Mo Bai & Weixuan Wang, 2024. "Role of green bonds in developing ESG projects in Eastern provinces of China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-8, December.
    18. Lee, Chien-Chiang & Xuan, Chengnan & Wang, Fuhao, 2024. "Natural resources and green economic growth: The role of artificial intelligence," Resources Policy, Elsevier, vol. 98(C).
    19. Hanzhi Zhang & Qiang Liang & Yu Li & Pengpeng Gao, 2023. "Promoting eco-tourism for the green economic recovery in ASEAN," Economic Change and Restructuring, Springer, vol. 56(3), pages 2021-2036, June.
    20. Zhang, Ming & Wei, Xuejiao, 2024. "Resource efficiency, cultural industry, and green economic growth: A synergistic approach," Resources Policy, Elsevier, vol. 90(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:palcom:v:12:y:2025:i:1:d:10.1057_s41599-025-04429-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: https://www.nature.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.