In recent years, China has embarked on an extraordinary journey toward the transformation of its economy into a high-income, innovation-driven powerhouse by 2030. The study draws upon in-depth research on China’s national climate targets and regional inequalities, as well as on the state-of-the-art SWITCH-China integrated system model. Key findings indicate that national policies targeting carbon peaking by 2030 and carbon neutrality by 2060, when combined with detailed provincial assessments and collaborative carbon mitigation strategies, can yield notable economic advantages. A robust methodological framework is established by integrating advanced optimization models such as the C3IAM/NET and Mr. COEP models alongside the SWITCH-China approach. These models enable the evaluation of fossil fuel consumption, emissions trajectories, and the economic impacts associated with various policy pathways. Based on a detailed quantification of regional capabilities, the research establishes that strategic interregional collaboration as well as targeted compensation mechanisms could avoid up to 1.54% cumulative GDP losses.