How economic policy uncertainty affects common prosperity in China? The mediating role of green finance and the moderating role of low-carbon technology

Abstract

During a period marked by economic instability and urgent environmental concerns, the Chinese government has prioritized the objective of achieving comprehensive common prosperity, alongside the targets of carbon peaking by 2030 and carbon neutrality by 2060, in its forthcoming economic development agenda. This objective has garnered significant attention and has emerged as a focal point in the government's strategic planning. Existing literature predominantly delves into the economic ramifications of policy uncertainty, with limited attention given to the intersection of economic and environmental impacts. This study aims to fill this gap by investigating the correlation between economic policy uncertainty and the pursuit of common prosperity in China, with particular emphasis on the pivotal roles played by green finance and low-carbon technologies. The study introduces a Common Prosperity Evaluation Index, assessing prosperity levels across Chinese provinces and cities from 2010 to 2021. The analysis employs the System GMM approach, revealing that prosperity disparities persist, with eastern regions outpacing central and western areas. Economic policy uncertainty emerges as a determinant negatively affecting prosperity, especially in regions where prosperity levels are high. Moreover, it impedes green finance development, thereby hindering prosperity gains. Contrastingly, advancements in low-carbon technology bolster green finance and support the advancement towards common prosperity, aligning with the Sustainable Development Goals, particularly SDG8 (Decent Work and Economic Growth) and SDG11 (Sustainable Cities and Communities). © 2024 Elsevier Inc.