Xiaoling Guo, Yangqi Zheng
Enhancing corporate green competitiveness while maintaining economic viability is crucial for sustainable development. Based on the ‘Comprehensive Demonstration Cities for Energy Conservation and Emission Reduction Fiscal Policies’ (‘ECER-CD’ policy) implemented by the Chinese government in 2011, this paper analyzes the impact of such policy on corporate green competitiveness enhancement. Under the framework of quasi-natural experimental design, this paper first identifies the implementation conditions of the ‘ECER-CD’ policy in demonstration cities, then constructs enterprise panel data for empirical analysis and adopts multiple specifications to ensure the reliability of our findings. The results demonstrate that the ‘ECER-CD’ policy significantly enhances corporate green competitiveness, evidencing its effectiveness in promoting sustainable corporate transformation. Mechanism analysis reveals three transmission pathways: incentivizing green technological innovation, facilitating corporate digital transformation, and strengthening enterprises’ responsiveness to environmental regulations. Moreover, the heterogeneity analysis reveals that state-owned enterprises, non-polluting industries, labour-intensive industries and small-scale firms demonstrate significantly stronger responses to the ‘ECER-CD’ policy. These findings provide evidence for policymakers in China and other developing economies pursuing sustainable development pathways.