Can Digital Services Trade Liberalization Improve the Quality of Green Innovation of Enterprises? Evidence from China

Abstract

Green innovation is a critical driver in achieving the goals of “carbon peaking” and “carbon neutrality”, as well as an important aid in accelerating green transformation. Does the opening-up of digital services trade, as a major component of the high-level opening-up strategy, serve to improve the quality of green innovation of Chinese enterprises at this critical juncture in China’s promotion of ecological civilization? To answer this question, this paper measures the degree of openness of digital services trade in each industry in China, and it empirically examines the impact of digital services trade liberalization on enterprises’ green innovation quality using data from A-share listed companies from 2014 to 2021. This research finds that, first, digital services trade liberalization can significantly improve the quality of green innovation of Chinese enterprises, which still holds after a series of robustness tests. Second, mechanism analysis indicates that digital services trade liberalization promotes enterprises’ green innovation quality by improving human capital level, increasing green R&D expenditure, and strengthening information resource sharing. Third, a heterogeneity test shows that the effect of digital services trade liberalization on the quality of green innovation is more prominent for state-owned enterprises, enterprises with stronger technology absorption capacity, highly competitive industries, and regions with a high intensity of environmental regulations. The study’s findings not only provide new perspectives and ideas for enterprises’ green innovation practices in the midst of the digital services trade wave but also theoretical and empirical support for the inherent self-consistency between high-level opening-up and green development.