High-quality economic growth and carbon emissions in Chinese cities: the moderating role of fiscal policies

Abstract In the rapidly evolving landscape of contemporary China, urban centers have emerged as focal points of a significant environmental challenge—carbon emissions. This comprehensive study delves into an intricate analysis, utilizing data gathered from 140 prefecture-level cities across China. Its principal aim is to dissect the effectiveness of strategies aimed at carbon reduction and fiscal policies within the multifaceted canvas of China’s urban metamorphosis, where the pursuit of high-caliber economic development takes precedence. The findings can be succinctly summarized as follows. Firstly, a statistically significant inverse correlation exists between high-quality economic development and carbon emissions in China’s urban centers. Secondly, when comparing resource-based cities to their non-resource-based counterparts, the former’s high-quality economic development plays a more prominent role in fostering carbon emission reduction. Finally, fiscal policies emerge as pivotal “accelerators” for advancing carbon emission reduction through high-quality economic development. However, their efficacy exhibits notable variations. It is essential to note that the moderating effect of environmental protection expenditures lacks statistical significance in resource-based cities and northern cities. Furthermore, the regulatory influence of resource taxation in southern cities is yet to be firmly established. This study provides practical policy recommendations for optimizing China’s eco-friendly fiscal system. These recommendations not only contribute to the realization of a green transition model for economic development but also serve as a valuable reference for governmental design of carbon emission reduction policies.