Carbon mitigation effect of service trade innovation: quasi-experimental evidence from China

This paper examines the environmental impact of service trade innovation in the context of China's dual-carbon goals. Leveraging the staggered difference-in-differences combined with double/debiased machine learning strategy, we identify the causal effect of the Service Trade Innovation and Development Pilot Policy on urban carbon emissions. Results show that the policy reduced emissions by an average of 8.9%. The carbon mitigation effect is more pronounced in coastal cities, those with more developed service sectors, and non-Two Control Zones. The examination of the fundamental mechanisms identifies four primary channels: the intensified enforcement of low-carbon policies, progress in green innovation, the expansion of regional market integration, and the improvement of urban trade networks. Spatial spillover analysis indicates significant carbon reductions within 0-100 km of pilot cities, but a rebound effect in the 100-500 km range, possibly due to resource agglomeration. These results underscore the environmental benefits associated with reforms in service trade and emphasize the necessity for regionally coordinated approaches to promote spatial equity in the implementation of low-carbon transition initiatives. JEL CLASSIFICATION: O14; Q56; Q58; R11.