Towards a Green Economy in China? Examining the Impact of the Internet of Things and Environmental Regulation on Green Growth

Abstract

The idea of green growth stresses the necessity for economic expansion while resolving environmental issues, notably climate change. The Internet of Things (IoT) and environmental regulations have the potential to support green growth. Therefore, this study intends to examine the empirical link between the IoT, environmental regulations, and green growth in China by utilizing the autoregressive distributed lag (ARDL) and quantile autoregressive distributed lag (QARDL) methods to analyze data from 1997 to 2021. Data are obtained from reputable local and international sources like the Organisation for Economic Co-operation and Development (OECD), World Development Indicators (WDI), the Energy Information Administration (EIA), and the National Bureau of Statistics of China. Findings derived from the baseline ARDL model prove that the IoT, environmental regulations, renewable energy consumption, and research and development (R&D) encourage long-run green growth. Likewise, the robust model also highlights that the internet, environmental policy stringency, renewable energy consumption, and R&D help encourage green growth. In the short run, environmental policy stringency and the internet are favorably linked to green growth in the robust model, and renewable energy consumption is favorably linked to green growth in the baselines model; however, environmental regulation is negatively linked to green growth. The findings from the QARDL analysis show that the impact of the IoT on promoting green growth is significant across all quantiles. On the other hand, the effects of environmental regulation are more pronounced at higher levels of green growth. These findings imply that policymakers should try to increase the role of digitalization in society by promoting the IoT and the internet to decouple economic growth and environmental pollution. Moreover, the digitalization policy should be supported by implementing strict environmental laws and regulations.

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“…Their findings indicate that, while rigorous environmental policies foster economic sustainability in more developed regions, their efficacy is diminished in less affluent locales, underscoring the intricate relationship between regional economic conditions and policy impact and suggesting a non-uniform benefit distribution of environmental stringency across the nation. Furthermore, analyses by Zhang and Du [175], Zhang et al [176], Wang et al [177], and Dong and Ullah [140] introduce a critical perspective, acknowledging the potential short-term economic drawbacks of stringent environmental policies, notwithstanding their undisputed long-term sustainability advantages. This viewpoint accentuates the complexity of navigating the sustainability trajectory, which may necessitate temporary compromises.…”

“…The empirical investigations by Zahoor et al [138] and Liu and Hei [139] lay a solid empirical foundation advocating for escalated investments in renewable energy. Furthermore, insightful analyses by Dong and Ullah [140] and Zou and Wang [141] elucidate the beneficial economic outcomes of rigorous environmental regulations. Together, these scholarly contributions illuminate the synergistic dynamics between renewable energy consumption and environmental policy rigor in propelling China towards a more sustainable economic future.…”

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“…This could be because high environmental regulation causes firms to increase their environmental governance activities, cost expenditures to increase significantly [58], and the carbon intensity of firms to increase in the short term. In regions with low environmental regulation, enterprises face less pressure from environmental governance [59], and their cost expenditures are relatively more stable, which is favorable for businesses' long-term green development; therefore, a major part of reducing firms' carbon emission intensity is digital transformation.…”

Exploring the convergence of ICT, digital financial inclusion, environmental pressures, and free trade and their significance in driving sustainable green investment initiatives under carbon neutrality targets

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