Assessing the impact of carbon reduction loan on China's green economic growth: A policy coordination perspective

Green economic growth is China’s important strategic choice under the rigid constraints of sustainable development. Using an extended E-DSGE model, this study evaluates the effects and transmission mechanisms of the CRL policy, which operates through a differentiated interest rate mechanism, across three dimensions: macroeconomy, climate governance, and financial stability. Results show that the CRL policy facilitates the cross-sector reallocation of capital and labor from brown to green firms, thereby enhancing green TFP and green GDP, optimizing industrial structure, and boosting employment. It also lowers carbon emission intensity and strengthens financial stability. However, a low carbon emission threshold may weaken its effectiveness. The outcomes of CRL are systematically moderated by the intensity of macroprudential finance regulation and structural monetary policy, with tighter oversight and looser policy amplifying its positive impacts. The CETS, through its quota trading and cost transmission mechanisms, generates an asymmetric incentive-disincentive effect whose synergy with CRL significantly enhances emission reductions and improves banks’ green asset structures, while further coordination of this combined mechanism with tax cuts demonstrates Pareto-improving characteristics that promote green growth, industrial upgrading, and green TFP alongside reduced social welfare losses.