Does perceived economic policy uncertainty restrict green technology development in China? Policy implications for global green economy transformation

Research background: In the context of green innovation as an important pathway to achieving global sustainable growth, developing green technologies is crucial to achieving China's sustainable development goals. Enterprises contribute to the low-carbon transformation of the economy through green innovation. However, the unpredictability of global economic policies has increased rapidly in recent years, raising decision-making risks for businesses and affecting their investment behavior. This, in turn, significantly impacts their green innovation activities. Purpose of the article: This study aims to analyze the impact of perceived economic policy uncertainty on corporate green innovation activities. This study focuses on exploring how perceived economic policy uncertainty affects green innovation. Methods: This study employs a panel Poisson model with panel data from Chinese A-share listed companies from 2010 to 2020. We verified the model's suitability and the robustness of the results through a likelihood ratio test and Poisson pseudo-maximum likelihood estimation. Findings & value-added: Perceived economic policy uncertainty significantly inhibits firms' green innovation activities. Mechanism tests indicate that perceived economic policy uncertainty suppresses green innovation activities by reducing environmental investment and financial asset allocation. Heterogeneity analysis shows that the detrimental effect of perceived economic policy uncertainty on green innovation activities is particularly noticeable among non-state-owned enterprises, pollution-intensive industries, and sectors with low environmental regulation. This study provides valuable information to promote green economy transformation in other economies.