National Low-carbon Policy Coordination and Low-carbon Transformation of China’s Industry

Abstract

Steadfast commitment to green, low-carbon, and high-quality development pathways, coupled with accelerating comprehensive green transformation across economic and social sectors, has become a central focus for governments, enterprises, and academia. While scholars have extensively examined whether national low-carbon policies promote economic green development, limited research exists on whether policy coordination can enhance the positive impacts of these policies on industrial low-carbon transformation.

This study investigates the impact and mechanisms of national low-carbon policy coordination on urban industrial low-carbon transformation using panel data from 285 prefecture-level cities spanning the period from 1994 to 2021. Our findings reveal that the national low-carbon city pilot policy alone shows no significant effect on industrial low-carbon transition, while the national low-carbon industrial park pilot policy independently demonstrates significant positive impact. Notably, when these two policies are coordinated, they generate a significantly stronger positive effect on industrial low-carbon transformation than either policy implemented in isolation.

Further analysis indicates that this synergistic effect operates primarily through two mechanisms: inhibiting human capital mismatch and capital misallocation, thereby improving resource allocation efficiency; and enhancing technological innovation. In regions with high levels of low-carbon industrial transformation, labor resource allocation plays a particularly significant role, while in regions with lower transformation levels, market competition effects are more prominent. Additionally, the positive effects of policy coordination are more pronounced in specific sectors (agriculture, forestry, animal husbandry, fishery, construction, wholesale and retail, and hospitality) and in central and western cities, as well as in mature and declining urban areas.

This research makes several contributions to existing literature. First, it addresses a significant gap by examining the synergistic effects between low-carbon policies rather than focusing solely on individual policy impacts. Using a difference-in-difference model with urban panel data, we isolate the net impact of policy coordination on China’s industrial low-carbon transformation, thereby expanding the literature on policy evaluation. Second, beyond confirming the effectiveness of policy synergy, we elucidate the internal mechanisms through which this coordination promotes industrial low-carbon transformation, providing feasible pathways for driving comprehensive green transformation. Finally, by examining differential impacts across industry types, resource city categories, and geographical locations, this study offers empirical evidence and theoretical support for understanding the effects of low-carbon policy coordination in contemporary China and informs future government policy formulation.