Promoting carbon neutrality and green growth through cultural industry financing

The paper examines how green financing within the cultural industry affects green growth across China's provinces. It situates the research within the broader context of climate change, the need for environmentally sustainable economic models, and the post-COVID push for green recovery. The cultural industry—covering arts, entertainment, tourism, and heritage—represents a notable share of GDP and can foster environmental awareness and social inclusion. The study focuses on China due to its expansive cultural sector, strong policy commitments to green finance (e.g., green bonds, green credit), and its post-pandemic recovery context. The research objective is to quantify the effects of cultural industry green financing on provincial green growth and to provide evidence-based implications for policy and practice.

Two strands of literature are reviewed. First, studies on green finance highlight its role in channeling capital to eco-friendly projects, attracting private investment, fostering green technological innovation, and aligning investor behavior with sustainability goals (e.g., Khan et al., Huang et al., Xu et al., Jiakui et al., He and Liu, Wang and Fan). Second, research on the green cultural industry emphasizes culture's contribution to sustainability via awareness, innovation, and digitization, and the need for sustainable investment, reform, and digitalization to align culture and tourism with green recovery (e.g., Soini and Birkeland; Zheng et al.; Klein et al.; Lee et al.; Zhu et al.; Zhao et al.). The review identifies a gap at the intersection of green finance and the cultural industry, motivating a provincial-level empirical analysis for China.

Panel data for 32 Chinese provinces from 2010–2021 (384 observations) were compiled from the China Statistical Yearbook, China Premium Database, and China Economic Government Reports Database. The dependent variable is a green growth index (GREENG; scale 1–10) computed following Kim et al. (2014) using 12 indicators covering production, consumption, and trade. The key independent variable is cultural sustainability investment (CULSUSINV), capturing investments such as heritage preservation and green museum development. Controls include carbon dioxide emissions (CARDI), financial market size (FIMAS), income level (INCO), and an ICT diffusion index (ICTD). All variables are log-transformed. The estimated long-run model is: LGREENG = a + θ1 LCULSUSINV + θ2 LCARDI + θ3 LFIMAS + θ4 LINCO + θ5 LICTD + εt. Econometric procedure: (1) test cross-sectional dependence using Pesaran's CD (2004); (2) assess stationarity with Pesaran's CIPS (2007), finding I(1) behavior; (3) test for cointegration via Westerlund (2007), indicating long-run relationships; (4) estimate long-run elasticities using the Common Correlated Effects Mean Group (CCEMG) estimator to address unobserved common factors and cross-sectional dependence; (5) conduct robustness checks using the Pooled Mean Group ARDL (PMG-ARDL) estimator.

Pre-tests show significant cross-sectional dependence for all variables; CIPS indicates stationarity at first differences; Westerlund tests confirm cointegration (notably G2, P1, P2 significant). CCEMG long-run coefficients: cultural sustainability investment positively affects green growth (0.638, p=0.002); carbon dioxide emissions negatively affect green growth (-0.149, p=0.053); financial market size is not significant (0.234, p=0.693); income level positively affects green growth (0.059, p=0.002); ICT diffusion index negatively affects green growth (-0.251, p=0.062). Robustness via PMG-ARDL corroborates directions and general significance: CULSUSINV (0.322, p=0.013), CARDI (-0.204, p=0.001), FIMAS (0.058, p=0.242, ns), INCO (0.219, p=0.059), ICTD (-0.153, p=0.011). Quantitatively, a 1% increase in cultural sustainability investment associates with roughly a 0.63% increase in green growth, while a 1% rise in CO2 emissions associates with about a 0.15% decrease in green growth.

The findings directly address the research question by establishing a positive linkage between green financing in the cultural sector and provincial green growth, indicating that cultural sustainability investments can be an effective lever for environmentally friendly economic development. The negative elasticity for CO2 aligns with expectations that emissions impede sustainable growth, reinforcing the need for emissions mitigation. The insignificant role of overall financial market size suggests that targeted green financing mechanisms within culture, rather than broader market expansion, are more pertinent for green growth outcomes. The negative effect of ICT diffusion indicates potential rebound effects from increased electricity consumption, implying that digitization must be coupled with clean power and energy-efficient ICT practices. These results complement prior literature highlighting culture's role in sustainability and green finance's role in mobilizing capital for green projects, and they provide granular, province-level evidence useful for policy design.

The study concludes that green financing directed to the cultural industry contributes meaningfully to green growth across Chinese provinces, while higher CO2 emissions and greater ICT diffusion are associated with lower green growth; income levels support green growth and broad financial market size does not show a significant direct effect. Policy implications include: creating supportive regulatory frameworks and incentives (e.g., tax benefits, subsidies) for sustainable cultural projects; fostering partnerships between financial institutions and cultural organizations to expand instruments like green bonds and sustainable funds; building capacity and financial literacy in cultural organizations; and stimulating consumer demand for sustainable cultural goods through public awareness and education. Digital transformation of the cultural sector (fintech, blockchain, big data) should proceed in tandem with expansion of sustainable power and energy efficiency to avoid emissions rebounds. Future research directions include longitudinal assessments of long-term impacts, analyses of regional disparities, evaluations of policy effectiveness, stakeholder role investigations, and examinations of COVID-19's influence on sustainable cultural projects.