China's Carbon Emissions Trading Market and Corporate Green Innovation: A Literature Review of Research Trends, Controversies, and Future Directions

HRMARS - Since China announced its "dual carbon" goals—peaking carbon emissions before 2030 and achieving carbon neutrality before 2060—carbon emissions trading (CET) has emerged as one of the country's principal market-based instruments for environmental regulation, and its innovation-inducing effect on firms has drawn sustained scholarly attention. Drawing on empirical studies published in recent years, this paper systematically reviews the research development linking China's carbon market to corporate green innovation. The review shows that the literature has largely converged on the direction of the effect: CET policy generally supports the Porter Hypothesis and significantly raises firms' green patent output. Notable disagreements persist, however, regarding the structure of innovation quality—specifically, the divergence between substantive and strategic innovation—as well as heterogeneity across ownership types and the relative weight of different transmission mechanisms. Building on this synthesis, this paper identifies several underexplored avenues for future research, including the fine-grained measurement of innovation quality, the synergistic role of digital finance, and new evidence from the unified national carbon market, thereby offering a concrete research agenda for subsequent empirical work.