Since its reform and opening up, China has maintained high economic growth for decades, which has been hailed as a "growth miracle", despite its low level of natural resource endowment, physical and human capital, and technological innovation capacity compared to developed countries. It is worth noting that local governments in China have played a very important role in seeking all possible ways to achieve regional economic growth. At the same time, local government’s incompetence, inefficiency, and corruption are among the factors that impede economic development and are important causes of regional economic decline. A study of the existing literature shows that studies assessing the contribution to economic growth through fiscal reforms are sweeping, and in general, fiscal decentralization can contribute to economic growth through local government behavior (Shen et al. 2012), allocation efficiency of resources (Grisorio and Prota 2015), fixed asset investment and foreign direct investment (Wang 2013), etc.
China is in a period of transformation of dynamics of economic development and industrial structure, and its focus has shifted from high speed development to high quality development, and it is also in a critical period of transformation to an environmentally friendly and resource-saving green economy. Under the international pressure of climate change and the increasingly severe natural endowment constraints, the realization of green economy transformation faces unequal benefits and costs in the short term, when local governments are motivated to make trade-offs between maximizing social benefits and maximizing their own interests. This paper intends to study the impact of fiscal decentralization on the development of green economy from the perspective of local government behavior, with a view to suggest for the country to promote the reform of government fiscal system and successfully realize economic transformation.
Due to the vast territory of China, resource endowments and potential comparative advantages vary greatly among regions, and the central often has difficulty in formulating strategies that fully meet the comparative advantages of each region within the information asymmetry and other constraints, thus resulting in a "one-size-fits-all" situation. As the degree of financial autonomy increases, local governments tend to develop appropriate strategies based on their potential comparative advantages, and gradually improve the quality of the environment as the development strategies become more compatible with local conditions (Kunce and Shogren 2008; Jacobsen et al. 2012). Based on the perspective of new environmental structural economics, the production structure endogenously determined by the factor endowment structure of matching various environmental structures, when local governments support industries and enterprises with comparative advantages by giving full play to their information advantages, so as to achieve the optimal environmental conditions that are most suitable for development (Han and Kung 2015). That is, as the financial autonomy of local governments rises, the development of local green economy will also have a positive trend.
Although fiscal incentives and regional interests are one of the important drivers of local government behavior, for government officials in the administrative pyramid, the "unwarranted opportunities" of official promotion are more realistic and important than achieving local fiscal revenue goals. Under the fiscal decentralization system, promotion tournaments cannot be fully open, fair and impartial, which may lead to the decoupling of official promotion from political performance goals, and even the existence of "buying and selling" of officials by related households; some local officials even lose the motivation of promotion in order to maintain the mutual benefit status with local stakeholders, and seek personal benefits. If local governments are not constrained and supervised, they will compete to relax environmental protection standards under the stimulation of economic incentives and political promotions, which is not conducive to environmental pollution control, but will lead to vicious competition among local governments and a "race to the bottom" (Gadenne and Singhal 2014; Cheng et al. 2021). Under fiscal decentralization, market segmentation due to differences in local resource endowments and protectionism for local dominant industries (Qiao et al. 2018), even though it can improve energy efficiency, prevents factor resources from flowing adequately between resource-poor and abundant regions, which in turn contributes to the failure of market supply and demand signals and affects the efficiency of market resource allocation (Démurger. 2001), which is not conducive to the development of green economy. Thus, the "Chinese style fiscal decentralization" system distorts factor markets to a certain extent, causing problems such as resource mismatch and distortion of the fiscal expenditure structure, and the "race to the top" among local governments will gradually decrease (De Siano and D'uva 2017).
In addition, local governments also have significant short-sightedness in environmental governance: First, it is difficult for local governments to take all factors into account in their fiscal decisions, and the results of environmental policies often have a certain "latency period" and the actual benefits are difficult to be seen in the short term, so local governments have an incentive to reduce their spending on environmental governance (Su et al. 2021; Ji et al. 2021); Second, because of the local environmental protection system, environmental protection departments are mostly restricted, not only as part of local governments and under their leadership, but also because their capital, including human and financial resources, is controlled by local governments, and they inevitably cater to the short-sighted decisions of local governments to obtain short-term performance; Finally, although some of the indicators of local governments are assessed by the "one-vote veto system", local government assessment indexes still take visible economic performance as the main assessment criterion, and local governments have motives to ignore indicators such as ecological protection to achieve major indicators such as GDP growth and fiscal revenue increase. In summary, this paper proposes the following hypothesis.
H1: Fiscal decentralization inhibits green economy development
It is worth noting that, based on the assumption that fiscal decentralization has a negative impact on the development of green economy, is there an externality factor that can meet the demand of green development and at the same time make private profits for local governments, that is, is there a rent-seeking behavior that can make private profits for local governments to "Washing Green"? In promoting the transformation of green economy, the central government pays special attention to the core research of green and low-carbon technology, and has been increasing the financial expenditure on green technology innovation in recent years.
Combing the existing literature, we can see that despite the high initial investment, long period and lack of economies of scale in green technology innovation research and development (Song et al. 2019). The purpose of green technology application is to improve the efficiency of enterprise resource use, reduce enterprise compliance costs while achieving enterprise pollution reduction and environmental management, and thus promote green economic development. Green technology innovation is also changing from the pursuit of "quantity" to "quality" in each region, and it can be achieved by releasing the effect of energy saving and emission reduction, promoting the cleanliness of industrial structure, and stimulating the local market for science and innovation (Kunapatarawong and Martíz-Ros 2016; Wang et al. 2021), further promoting high-quality economic development. Local governments can influence the efficiency of resource allocation through welfare policies, public goods allocation, and taxation systems, which in turn guide the strategic decisions of enterprises. However, green technology innovation not only has the characteristics of certain public goods, and the social benefits are far greater than the individual benefits, which easily makes it difficult for subjects to get compensation for innovation, from reducing the investment in this direction. Local governments can encourage green technology innovation through tax breaks, financial subsidies, and measures to strengthen the protection of enterprise property rights, so as to achieve the effective allocation of resources and the sustainable development of green economy.
However, for local governments with high financial autonomy, in order to maximize their own interests during their tenure, their short-sighted behavior will induce them to use their own jurisdiction to support short and quick projects that satisfy the "performance" assessment and have quick results, thus ignoring innovation projects with high R&D investment and long development projects, and also weakening the innovation motivation of economic agents by means of government-enterprise collusion and biased investment attraction. This can also weaken the incentive of economic agents to innovate through government-enterprise collusion and biased investment promotion (Neyapti 2010; Guo et al. 2020). Local governments stimulate local firms' investment in R&D and production activities in order to reach promotion performance, but environmental policies that enhance the quality of environmental management increase firms' operating costs, reduce their profits, and discourage firms' expansion and reproduction (Wang and Ma 2014). In areas where regulation is weak, this contradiction between government performance and corporate profitability can lead to a collusive relationship between local governments and enterprises, with rent-seeking instruments such as biased financial subsidies and lax environmental policy restrictions, which are mainly at the expense of the environment, achieving a "win-win" situation for both local governments and enterprises. At present, not only is it difficult to quantify the performance evaluation system of environmental governance, but also the application of green fiscal expenditure projects lacks the same intuition of beneficiaries as general public goods, which makes it difficult to make objective judgment and precise monitoring, and such ambiguous criteria provide space for local governments and market players to collude under the guise of "green". But what is more noteworthy is whether local governments are motivated to use the green technological innovation of economic agents to cover up the decline in environmental governance caused by their own "political performance"? In other words, can local governments wash green by this means, and thus achieve their own goals by "fighting for big with small" or even doing nothing? When individual market players have obvious advantages in the "quantity" of green technology innovation in the previous year, local governments can increase their support without considering the "quality", which can not only green the performance evaluation of local governments, but also meet the interests of individual market players. This can not only green the performance evaluation of local governments, but also meet the interests of individual market players. However, such biased support is not conducive to the effective allocation of government resources, and may even inhibit green technological innovation activities that are truly used to improve environmental quality, thus hindering the development of green economy. To sum up, this paper proposes the following hypothesis about the "greening" behavior of local governments.
H2: regional green technology innovation amplifies the negative impact of fiscal decentralization on green economic development