The Digital Services Trade’s Impact on the Green Development of the Industrial Sector in the People’s Republic of China

Countries seek to maximize economic growth while minimizing environmental damage. Protecting the environment is a natural constraint on economic growth. This paper shows that trade in services helps industries to not only grow but to also become “greener.” Trade in services, therefore, has a dual benefit. It will be shown, based on a review of panel data at the industrial level, that services trade has had a positive impact on green industrial development in the People’s Republic of China. The impact of services trade on industrial green development is examined through the lens of green total factor productivity. Services trade can significantly improve industrial green total factor productivity, which promotes industrial green development. This is more pronounced with trade in the science and technology service fields. Therefore, it is in the best interest of an economy to embrace trade in services and, particularly, to concentrate on trade in research and development.