Taxing and trading for a greener future: The impacts of China's environmental and trade policies on environmental sustainability

This study delves into the dynamics of China's environmental and trade policies and their impact on environmental sustainability over the period spanning from 1998 to 2022. Employing the autoregressive distributed lag methodology for empirical analysis, our investigation reveals distinctive patterns in policy outcomes. First and foremost, our research illuminates the affirmative role of environmental policy in fostering environmental sustainability. The observed negative effect of environmental policy on carbon dioxide emissions underscores its efficacy in mitigating environmental degradation. In contrast, our findings bring to light the counteractive influence of trade policy on environmental sustainability. The positive effect of trade policy on carbon dioxide emissions signals potential challenges emanating from heightened trade openness concerning environmental preservation. Furthermore, our study elucidates the complex interplay involving information and communication technology, financial development, and fossil energy consumption and their implications for environmental sustainability. The discernible positive effects of these factors on carbon dioxide emissions underscore the need for policy alignment with environmental sustainability objectives. In sum, our research contributes to an enhanced comprehension of the intricate relationship between policy interventions, technological facets, and environmental outcomes within the context of China. These insights bear significance for policymakers and stakeholders striving to navigate the multifaceted landscape of economic growth and ecological preservation in China. Balancing these imperatives is central to achieving lasting environmental sustainability. •Using ARDL, this study shows China's 1998–2022 environmental policies significantly cut CO₂ emissions, curbing degradation.•Findings reveal China's trade policies hinder sustainability, shown by their positive link to higher CO₂ emissions.•This study examines ICT, financial development, and fossil energy use, highlighting their impacts on CO₂ emissions and policy, respectively.•This study offers insights into balancing China's growth and environment, stressing policy alignment for lasting sustainability goals.