Interactive relationship between China's Green Investment and Green Ecology—Based on Empirical Research in 30 Provinces

Abstract

Whether there is an interactive relationship between green investment and green ecology, the current opinions seem to confront each other. This paper employs a panel vector autoregressive model to construct an empirical analysis on China’s provincial panel data from 2005 to 2019. Specifically, generalized moment estimation, impulse response function, variance decomposition and other measurement methods are applied to study the interactive relationship between green investment and green ecological development. The research results show that: (1) The inertial development of the green investment system seriously restricts the progress of green investment levels, and the long-term development of green ecology has a significant self-reinforcing trend. (2) The two-way interaction between green investment and green ecology exhibits a positive spillover effect in the short term, but the positive effect gradually weakens in the long run. (3) The impact of green ecology on green investment is most significant in the interactive relationship, and the positive effect of green ecology on green investment in the western region is the most prominent. Therefore, the government should standardize green investment standards and use policy guidance to promote the regional transfer of green investment and green ecological resources. Financial institutions should appropriately lower the financing threshold for polluting enterprises and municipal construction, and leverage more social funds to flow into long-term green technologies and green industries. Companies should raise awareness of environmental information disclosure, ban outdated production capacity and transition to a cleaner production model in order to obtain support from green funds.