Moving Towards Sustainable Development: Can Narrowing Income Inequality Facilitate Green Growth in China?

To test the dynamical linkage between inequality and green growth in China, the green growth index is gauged and the inequality–green growth nexus is detected by employing panel data from 2004 to 2017. The concrete impact channel of urbanisation is further tested in the inequality–growth nexus. The primary findings are presented as follows: (i) China’s green growth is improving, and widening income gap is reversing this active effect; (ii) the inhibiting effect of income inequality on green growth is mainly manifested in the promoting impact of inequality on economic growth and its deteriorative impacts on households’ wellbeing and the ecological environment; and (iii) the intermediary transmission role of urbanisation construction has been strongly proved; in other words, the widening income gap will further optimise the green and clean economy by boosting the construction of urbanisation. Following the above three findings, a series of policy recommendations are presented.