Green goals, strategic actions: China's experience with transformative innovation policy

Hannah Yi Wei

Chapter 21 in Research Handbook on Regions and Transformative Innovation Policy, 2026, pp 350-369 from Edward Elgar Publishing

Abstract: China's green transition is among the most ambitious state-led attempts to align climate goals with technological leadership. This chapter begins by cataloging major green policy initiatives launched since the early 2000s, including emissions targets, financing mechanisms, and industrial subsidies that elevated China into a green innovation powerhouse. Building on this overview, I then examine the effects of the Strategic Emerging Industries (SEI) initiative through an event study with city-industry level patent data. I uncover two critical divergences: first, while targeted green sectors experienced explosive growth in innovation scale, equally prioritized non-green sectors saw only modest gains. Second, and more fundamentally, innovation quality stagnated across all sectors despite quantity surges. While existing literature credits China's green innovation success to infrastructure and global value chains, this chapter calls for policy recalibration toward rewarding innovation quality to sustain transformative green growth.

Keywords: Transformative innovation policy; Green innovation; Industrial policy; Strategic and emerging industries; Quantity-quality paradox; Green transformation (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035309924
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