Can environmental taxes and green technological investment ease environmental pollution in China?

Abstract

This study examines the complex relationship between environmental taxation, green technology, green investment, real GDP, and environmental pollution by employing the Nonlinear autoregressive distributive lag model for China. The findings indicate that environmental tax policies have significant short- and long-term effects, with positive shocks leading to pollution reductions. The positive and negative shocks to green investment increase pollution levels in the long run. Moreover, the real GDP displays pollution reductions in the short run. The results provide valuable insights into China's environmental and economic situation and offer policy recommendations. These findings were confirmed using the Wald test. The findings emphasize China's need for stronger environmental taxes, green technology adoption, evaluated green investments, and sustainable economic growth to achieve cleaner production and environmental sustainability.