Economic policy uncertainty is a key determinant of exchange rate stability. This study investigates the impact of China's categorical economic policy uncertainties on the long-term correlation between onshore (CNY) and offshore (CNH) Renminbi (RMB) exchange rates. We find that fiscal policy uncertainty (FPU), monetary policy uncertainty (MPU), and exchange rate and capital account uncertainty (EXRPU) have a significant negative effect on this correlation, while trade policy uncertainty (TPU) has no significant impact. Furthermore, CNY and CNH do not effectively diversify risks and provide only limited hedging benefits.

This paper investigates the impact of environmental awareness on local fiscal revenue in China. We exploit the unexpected release of the environmental documentary Under the Dome in early 2015 as an exogenous shock on residents preferences. The generalized difference-in-difference estimation shows that on average, a one standard deviation increase in the exposure to the documentary would reduce the government land sale revenue by 21.45 billion CNY. Consistent with the “vote with feet” mechanism in Tiebout model, after the release of this film, residents increase awareness of air pollution and express higher mobility intention. Local government also raises environmental investment as a response. This indicates the value of market in constraining the behavior of local governments in authoritarian states.

A significant number of procurements in both public and private sectors have adopted the practice of splitting the award among multiple bidders in an auction, as an alternative to the one-winner-take-all approach. This aims to encourage participation from small firms and reduce dependency on a single supplier. One prominent example is China’s national drug procurement multiple-winner auction, where the drug supply is divided among several winners, increasing in proportion to the number of participants. Given the societal importance of drug prices, it is crucial to properly examine the rationale for using split-award auctions. However, there is limited theoretical and empirical guidance available in the literature. This paper investigates the competitive impact of split-award auctions on key outcomes, such as participation and procurement costs, using both a theoretical framework and empirical evidence. Theoretically, it demonstrates that split-award auctions consistently boost participation but also increase expected procurement costs in almost all instances. The expected procurement cost decreases only if the split-award auction raises participation from 0 to 1 compared to the winner-take-all auction. Empirically, the paper estimates the direction and magnitude of the effects on participation and expected procurement costs using drug procurement data. The findings reveal that split-award auctions moderately increase average participation by 0.85 bidders (17%), but significantly raise the unit expected procurement cost by 4 CNY (38%). Almost half of the overall increase in expected procurement costs stems from reallocating production to more expensive bidders, while the other half results from increased markups charged by bidders in response to this reallocation.

Quantifying the economic loss from climate change in China is crucial for understanding the potential costs and benefits of climate policy within the context of carbon neutrality. This study develops a multidisciplinary and integrated assessment framework for climate damage, which uses the Beijing Climate Center Simple Earth System Model (BCC-SESM) to estimate climatic data under the Representative Concentration Pathways (RCPs) scenarios with the medium Shared Social-economic Pathway (SSP2) scenario in China. This paper estimates climate damage in eight major sectors by a bottom-up approach, makes substantive revisions and calibrations for the sectoral climate damage functions and parameters for China based on the FUND model, and formulates the aggregate climate damage function. Results show that under the Business-as-Usual RCP8.5 scenario, by 2050 human health damage accounts for the largest share (61.92%) of the total climate loss, followed by sea-level rise damage (18.57%) and water resources damage (5.84%). Climate damage in non-market sectors reaches 14.64 trillion CNY, which is a 4.8-fold increase over the climate damage of market sectors which is only 3.02 trillion CNY. The total climate damage function for China is a quadratic function of temperature rise, with climate damage of 5.36%, 5.67%, 5.74%, and 8.16% of the GDP by 2050 under RCP2.6, RCP4.5, RCP6.0, and RCP8.5 respectively, indicating that the marginal climate damage increases non-linearly with temperature rise.

Following the successful experience of USDX, this paper gives a profile of how to design a foreign exchange index for China and elaborates three functions and implications of CNYX in foreign exchange market. This paper also demonstrate the models to get the equilibrium price of CNYX derivatives. CNYX derivatives provide traders and hedgers with a tool for avoiding risk and give a new approach for China’s large foreign reserve to optimize its structure to prevent the devaluation.