Does Green Finance Facilitate the Upgrading of Green Export Quality? Evidence from China’s Green Loan Interest Subsidies Policy

Jinming Shi (), Jia Li (), Shuai Jiang, Yingqian Liu and Xiaoyu Yin
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Jinming Shi: School of Economics, Shandong Normal University, Jinan 250014, China
Jia Li: School of Economics, Shandong Normal University, Jinan 250014, China
Shuai Jiang: School of Economics, Shandong Normal University, Jinan 250014, China
Yingqian Liu: School of Economics, Shandong Normal University, Jinan 250014, China
Xiaoyu Yin: School of Economics, Shandong Normal University, Jinan 250014, China

Sustainability, 2025, vol. 17, issue 10, 1-30

Abstract: In the global pursuit of sustainable development and climate change mitigation, reconciling export growth with environmental protection has emerged as a universal challenge. As the world’s largest developing economy, China has traditionally relied on a resource-intensive development model to fuel rapid foreign trade growth. However, this extensive growth pattern has not only led to environmental pollution domestically but has also encountered hurdles from international green trade barriers. Finance, as a key driver of stable economic growth, plays a pivotal role in achieving high-quality trade development. Against this backdrop, the Chinese government has introduced the green credit interest subsidies policy. This policy aims to coordinate government financial resources and guide capital toward green production, alleviating financing constraints and fostering the upgrading of export product quality. Utilizing data from the World Bank, China Customs statistics, and provincial panels from 2011 to 2020, this study employs a multi-period difference-in-differences (DID) model to examine the causal impact of the green credit subsidies policy on efforts to upgrade the export quality of green products across China’s regions. The benchmark regression results indicate that the green credit interest subsidies policy has significantly improved the export quality of green products across China’s manufacturing industries. Heterogeneity analysis shows that this policy has had a more pronounced positive impact on green product quality in industries with quality-based competition strategies, in regions with well-coordinated local finance and financial policies, as well as in countries that have concluded environmental clauses with China. Mechanism analysis reveals that, on the export side, the policy enhances green product quality by easing financing constraints, increasing green credit, boosting productivity, and upgrading industrial structures. On the import side, the policy promotes green product quality by expanding the scale, variety, and quality of green intermediate goods. This research offers valuable insights for developing countries aiming to establish export-oriented green transformation and upgrading strategies.

Keywords: green loan interest subsidies policy; export quality; multi-period DID (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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