Green Innovation, Industrial Upgrading, and Urban Environmental Improvement—Evidence from the Construction of National Forest Cities in China

Promoting the construction of National Forest Cities to enhance urban ecological environmental quality and foster green and sustainable development has become an important policy pathway in China’s ecological civilization agenda. This study employs panel data for 214 Chinese cities over the period 2003–2023 and adopts a difference-in-differences (DID) approach to empirically examine the impact of National Forest City construction—a policy implemented in China since 2004—on urban ecological environments and its underlying mechanisms. The results indicate that National Forest City construction significantly improves urban ecological environmental quality. The findings remain robust after a series of robustness checks. Mechanism analysis shows that National Forest City construction primarily promotes urban environmental improvement by enhancing urban green innovation and optimizing adjustments to the urban industrial structure. Further heterogeneity analysis reveals that the environmental effects of the policy are more pronounced in non-resource-based cities, non-central cities, large cities, and cities with stronger governance capacity and higher levels of environmental concern. The conclusions provide policy implications and mechanistic insights from China’s experience for other cities around the world seeking to jointly address environmental pollution and climate change through comprehensive ecological interventions and to advance green and sustainable development.