Decarbonizing China's Economy: Empirical Insights on Policy Stringency, Industrial Transformation, and Green Innovation

China, the world’s largest greenhouse gas emitter, grapples with aligning economic growth with its 2030 carbon peak and 2060 neutrality goals, yet the combined impact of policy stringency, industrial transformation, and green innovation on carbon intensity remains insufficiently understood. This study examined the drivers of carbon intensity in China from 1999 to 2023, analysing how policy stringency, industrial restructuring, green innovation, renewable energy, foreign direct investment, urbanization, and energy efficiency interact. Using World Bank, we applied econometric techniques like ARDL, FMOLS, and variance decomposition to capture dynamic relationships and address endogeneity. Results confirm that stringent policies and shifts from heavy industry significantly lower carbon intensity, as do renewable energy and urbanization. Surprisingly, green innovation’s effect is robust short-term but less consistent long-term, while foreign direct investment’s impact depends on policy context. These findings highlight the need for integrated strategies combining regulatory rigor, industrial reform, and renewable energy expansion to achieve decarbonization. Policymakers should prioritize sustained enforcement and green financing to enhance outcomes, particularly in high-emission sectors. Future research should investigate regional variations and non-linear policy effects to refine decarbonization strategies.