The Effect of the Social Credit System on China’s Green Economic Development: Evidence from a Quasi-Natural Experiment

Wanteng Zheng (), Tianbao Yin and Jiaqi Gao
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Wanteng Zheng: The School of Management, Jiangsu University, Zhenjiang 212013, China
Tianbao Yin: The Glorious Sun School of Business and Management, Donghua University, Shanghai 200051, China
Jiaqi Gao: The School of Finance & Economics, Jiangsu University, Zhenjiang 212013, China

Sustainability, 2025, vol. 17, issue 22, 1-19

Abstract: Improving the credit system within a market economy is key to advancing sustainable economic development in China. Using panel data from 280 cities between 2009 and 2022, this study combines a quasi-natural experiment of China’s social credit system (SCS) reform pilot program and applies a difference-in-differences (DID) model to analyze the impact of SCS on green economic development. The results indicate the following: First, the SCS significantly contributes to China’s green economic development, and this conclusion remains valid under a variety of robustness tests. Second, the positive impact of the SCS is more pronounced in non-coastal, resource-based, and low-environmental-regulation regions. Third, the SCS drives the development of China’s green economy through three pathways: reducing transaction costs, optimizing the market competition environment, and stimulating green innovation. Accordingly, it is imperative to strengthen the foundational infrastructure of the SCS, implement differentiated governance frameworks, and thereby enhance the sustainable development of China’s green economy.

Keywords: SCS; China’s green economy; DID; quasi-natural experiment (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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