Nexus of GDP, inflation, renewable energy, trade openness, FDI, and open innovation in China: New insights from the ARDL method

This study investigates the dynamic interrelationships among economic growth (EG), inflation (INF), renewable energy consumption (RE), trade openness (TO), foreign direct investment (FDI), and open innovation (OI) in China over the period 1990–2023. Using the autoregressive distributed lag (ARDL) bounds testing approach, the analysis examines short- and long-run linkages among these key macroeconomic and innovation-related variables. The empirical findings reveal long-run cointegration, with RE use, TO, and FDI positively contributing to GDP growth, while INF exerts a dampening effect. Moreover, OI emerges as a critical channel reinforcing the growth-enhancing effects of RE and international integration. Short-run dynamics indicate significant adjustment processes through the error correction term, confirming the robustness of the ARDL specification. These results highlight the pivotal role of innovation-driven strategies in sustaining China’s green growth trajectory while managing inflationary pressures and integrating into global markets. The study contributes to the literature by combining macroeconomic, energy, and innovation dimensions within a unified empirical framework. It offers actionable insights for policymakers seeking to balance growth, stability, and sustainability. Based on the estimated long-run elasticities, the study specifically recommends that China prioritize expanding international collaborative innovation platforms and innovation-oriented RE programs, while redirecting FDI and trade policies toward technology-intensive and green sectors to maximize the growth returns from its green, innovation-driven development strategy.