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Understanding sustainable growth in the face of economic policy uncertainties

Author

Listed:
  • Xiang Tiange

    (University of Waikato Joint Institute, Hangzhou City University)

  • Sultan Sikandar Mirza

    (University of Waikato)

  • Chengwei Zhang

    (University of Waikato Joint Institute, Hangzhou City University)

  • ChengMing Huang

    (University of Waikato Joint Institute, Hangzhou City University)

Abstract

This paper investigates the impact of economic policy uncertainty (EPU) in China, measured by a news-based index, on the sustainable growth of 2771 Chinese non-financial A-share firms (including 1674 SMEs and 1097 non-SMEs) from 2010 to 2022. We also analyze how green business practices moderate the impact of EPU on firms' sustainable growth. After implying various econometric models, this study finds that EPU has a significant negative effect on the sustainable growth of Chinese firms, which is more pronounced among non-SMEs. Heterogeneity analysis reveals that the negative impact of EPU on CSG is more pronounced in big firms, highly leveraged firms, firms with low liquidity and low financialization in China. We further reveal that this negative impact of EPU stems from trade policy uncertainties. Furthermore, findings reveal that green business activities positively moderate the association between EPU and sustainable growth, and that this moderating impact is more pronounced among SMEs. These findings are consistent with various robustness approaches. This paper provides useful insights for enterprises to improve their sustainable growth in the context of economic policy uncertainties by adjusting their number of employees, board of directors, average age of staffs, financialization level and debt flexibility.

Suggested Citation

  • Xiang Tiange & Sultan Sikandar Mirza & Chengwei Zhang & ChengMing Huang, 2025. "Understanding sustainable growth in the face of economic policy uncertainties," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(8), pages 18899-18932, August.
    • Handle: RePEc:spr:endesu:v:27:y:2025:i:8:d:10.1007_s10668-024-04651-0
    DOI: 10.1007/s10668-024-04651-0
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    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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