Modeling the US–China Tension Index: Green Technology, Trade, and Investment Effects on Sustainable Development

ABSTRACT This study investigates the determinants of US–China tensions, with particular emphasis on the roles of trade openness, foreign direct investment, renewable energy consumption, CO 2 emissions, merchandise exports to high‐income economies, and research and development activity. Using annual data for China covering 1993–2023 ( N = 31), the analysis adopts a single‐country time‐series framework based on the ARDL bounds‐testing approach and its accompanying Error Correction Model (ECM) to assess long‐run relationships and short‐run adjustments. The US–China Tension Index (UCT) used in this study is extracted from the Policy Uncertainty Project, where it is constructed by the index authors using newspaper‐based keyword searches and normalized article‐frequency measures. The results indicate that trade openness, foreign direct investment, renewable energy consumption, and exports to high‐income markets are associated with lower levels of bilateral tension, while higher CO 2 emissions and increased R&D expenditures are associated with heightened tensions. The significant error‐correction term confirms the presence of a stable long‐run equilibrium. Overall, the findings suggest that economic integration and sustainable development channels—particularly investment, renewable energy use, and technological factors—are linked with reduced geopolitical frictions, whereas environmental pressures and technological rivalry are linked with increased tension.