Panel study demonstrates global value chain positioning modulates carbon regulation-driven innovation in industrial sectors, highlighting trade integration's policy role.
As China transitions from high-speed growth to high-quality development, technological innovation has become a driver of industrial transformation. Carbon regulation can affect innovation, but its effect is moderated by global value chains (GVCs). Using 2007–2021 panel data for 16 Chinese industrial sectors, this study examines how carbon regulation and GVCs affect technological innovation, with projections to 2040. The results show that carbon regulation generally promotes innovation. GVC position and forward participation facilitate innovation, while backward participation constrains it. Partial linear functional coefficient estimates reveal that a higher GVC position strengthens the marginal innovation effect of carbon regulation, whereas greater forward participation weakens it. This pattern reflects the concentration of Chinese sectors in standardized, energy-intensive intermediates with limited pricing power. Scenario forecasts indicate higher innovation paths under the CR-GVC setting than under BAU, with the growth advantage peaking in 2031.
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Yu et al. (2026) studied this question.
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