China’s carbon trading pilot policy, economic stability, and high-quality economic development

Abstract The purpose of this study is to examine how economic development and stability are affected by carbon trading pilot programs. Using panel data from 31 Chinese provinces and autonomous regions between 2005 and 2021, two hypotheses were tested using the DID model. The findings indicate that (1) the carbon trading market pilot program has an immediate effect on economic stability. (2) High-quality economic development is positively and significantly impacted by the carbon trading market pilot program. Regional heterogeneity exists in the effects of carbon trading pilot programs on high-quality development and economic stability. The relationship between carbon trading pilot programs and economic development is not conclusive, despite the growing number of these policies. Given this, additional investigation into this connection is required. Understanding the results of carbon trading pilot programs can be used to gauge how successful these initiatives are. This research adds to the body of knowledge regarding the impact of the carbon trading pilot programs. It then makes policy recommendations that may serve as a guide for future “double carbon” research.