The impact of China’s booming tech sector on environmental sustainability: An analysis through comprehensive CS-ARDL approach

Abstract

China’s rapid technological advancement and the growth of its tech sector have raised concerns about their impact on environmental sustainability. The current analysis aims to contribute to the existing literature by offering a fresh perspective on China’s environmental sustainability, as the existing literature tends to overlook the role of the size of the technological market, which is closely connected with several Sustainable Development Goals (SDGs)—SDG 7, SDG 9, SDG 11, SDG 12 and SDG 13. China can make significant strides towards achieving these goals by harnessing the potential of the technological market and aligning it with environmental sustainability objectives. This study also investigates the roles of urbanization and economic growth and examines the existence of the inverted N-shaped Environmental Kuznets Curve hypothesis in 31 Chinese provinces from 2004 to 2021. Robust tests are employed to analyse the data, including the Cointegrated Structural Auto Regressive Distributed Lag approach (CS-ARDL) and the Augmented Mean Group(AMG) method. The results indicate that economic growth, urbanization, and the size of the technological market can reduce SO₂ emissions, demonstrating a positive environmental impact through China’s inverted N-shaped Environmental Kuznets Curve. Additionally, the Dumitrescu-Hurlin Granger causality test showed evidence of bidirectional causality between the size of the technological market and SO₂ emissions. Based on the findings, the study proposes sustainable development policies for China, in line with the SDG targets. In this context, the country’s rapid economic growth and strategies for industrial competitiveness need reassessment. The objective should be to redesign these strategies to increase the proportion of high-tech activities in overall manufacturing and promote the adoption of renewable energy in the country’s total energy consumption. Consequently, Chinese policymakers should prioritize the implementation of regulations that uphold fundamental principles to enhance environmental quality while maintaining rapid economic growth and a competitive advantage in the industrial sector.