Dynamics in green governance in China: Exploring the relationship between carbon emissions, water consumption and economic planning

Environmental planning under government control plays a crucial role in shaping national environmental outcomes. This study examines how China’s five-year economic planning cycles influence carbon emissions and water consumption. Using data from 240 Chinese cities (2007–2022), our analysis reveals that fiscal pressures significantly constrain resource use, reducing emissions and water consumption. However, as the planning cycle nears its conclusion, local governments ramp up industrial and infrastructure activities to meet policy targets, leading to a notable surge in carbon emissions and water usage. Quantile regression analysis further shows that these effects vary across different levels of urban development, with cities at different economic stages experiencing divergent environmental impacts. These findings underscore the complex trade-offs between economic growth, fiscal management, and environmental sustainability in a centrally planned economy. While fiscal constraints can limit resource use, the cyclical nature of planning introduces short-term environmental strains that may undermine long-term sustainability goals. This suggests a need for adaptive policy mechanisms that distribute economic activity more evenly throughout the planning cycle, rather than allowing for late-stage surges. Additionally, strengthening environmental regulations and incentivizing long-term green investments could mitigate the adverse effects of economic planning cycles on resource consumption. These insights provide implications for policymakers seeking to balance economic development with environmental stewardship, particularly in economies where centralized planning remains a dominant governance tool.