This paper develops an SOE (small open economy) dynamic general equilibrium model to study the impact of climate change on the current account. By calibrating the model to Chinese economy, we find the following results. First, the current account-output ratio improves in the first decade following an increase in global temperature caused by climate change. It then deteriorates in the following next three decades. Second, the overall current account-output ratio dynamics in response to climate change is neither affected by the types and stringency of climate policies, nor by the levels and growth rates of temperature increases. Third, the impact of an increase in temperature from 1.28 ℃ to 1.5 ℃ relative to the pre-industrial periods (1850-1900) on the current account-output ratio is equivalent to that of an approximate 0.14% permanent decline in TFP. Finally, although the current account-output ratio is likely to deteriorate in the first year when temperature increases instantly, it might not be true if the coefficient of relative risk aversion, or interest rate premium is larger, or debt sensitivity to interest rate is smaller.

Previousresearch on internal mobility has neglected the role of local identity contrary to studies analyzing international migration. Examining social identity and labor market outcomes in China, the country with the largest internal mobility in the world, closes the gap. Instrumental variable estimation and careful robustness checks suggest that identifying as local associates with higher migrants’ hourly wages and lower hours worked, although monthly earnings seem to remain largely unchanged. Migrants with strong local identity are more likely to use local networks in job search, and to obtain jobs with higher average wages and lower average hours worked, suggesting the value of integration policies.

We find evidence that firms engage in earnings management to potentially diminish environmental regulatory attention after the implementation of an automatic air pollutant monitoring system in China. Polluting firms increase their use of discretionary accruals and reduce the informativeness of earnings, compared to non-polluting firms. Polluting firms that are larger, more profitable, located near monitoring stations, and situated in less market-oriented regions exhibit heightened earnings management, consistent with the greater environmental regulatory exposure these firms face. The behavior is moderated by stronger customer-supplier relationships and lower market competition, when the cost of earnings management is higher. Our findings highlight the conflict between environmental and governance issues.

In this study, we investigate the impact of the development of the digital economy on corporate innovation and value using data of listed firms in China spanning the years 2011 to 2018. Our findings reveal a positive correlation between the development of the digital economy and corporate innovative activities, with a more pronounced effect observed in growth-stage firms, labor-intensive enterprises, and companies situated in underdeveloped regions. To establish a causal relationship, we employ a quasi-experimental approach utilizing the "Broadband China" pilot program. Using a difference-in-difference framework, we establish a causal link between the advancement of the digital economy and the increased innovative activities. Furthermore, our research underscores that digital economy development enhances firm value by promoting innovative activities. These results support the view that the digital economy plays a pivotal role in increasing firm value and fostering sustainable development in the overall economy.

As China’s Zero-COVID policy has come to an end and travel restrictions have been removed, the country’s mobility patterns are very likely to become more heterogeneous than during the pandemic. Human mobility is a key mechanism through which economic activities emerge and viruses spread. It can bring both advantages and challenges to cities with different characteristics. This paper investigates intra-city mobility trajectories of 368 Chinese cities within a non-linear time-varying latent factor framework to uncover the evolution of heterogeneity in local travel behavior amidst that China has been approaching the turning point of the post-pandemic new normal. To this end, we compiled a novel panel on a weekly basis, using the latest Baidu Mobility Data and the risk-level data released by the State Council of the People’s Republic of China. We further examine the effects of exposure to high COVID-19 risk in the city on commuting behavior between May 17, 2021 and June 26, 2022. Our results provide stylized facts on stratified local travel across China: first, the 368 cities can be categorized into six clusters based on their mobility dynamics, and second, the gaps in intra-city mobility tend to narrow within each cluster but widen between different clusters. Moreover, exposure to high COVID-19 risk has a stronger impact on home-workplace commuting rates than on dining-, leisure, and recreational travel rates, persistently dampening commuting behavior. In addition, divisions in intra-city travel strength and commuting behavior between western regions and the rest of China are evident. In sum, this paper suggests that the daily life and economic activities which depend heavily on human mobility are recovering at different rates across China.

Digital transformation provides enterprises a catalyst for new growth. This study delves into the correlation between digital transformation and corporate innovation from 2016 to 2020 based on a sample of Chinese A-share listed companies. It seeks to understand the underlying mechanisms and pathways of this relationship. Our research suggests that digital transformation significantly bolsters a company’s innovation capabilities. The mediating mechanisms indicate that the degree of digital transformation in enterprises supports this enhancement in various ways. Firstly, it lowers production costs. Secondly, it strengthens positive market expectations. Thirdly, it aids in managing operational risks effectively. All these factors collectively augment the innovation capacities of enterprises. Further analysis shows that digital transformation can successfully counterbalance the negative influences of economic policy uncertainty on corporate innovation. These insights offer a theoretical basis for elevating the level of digital transformation in enterprises and achieving superior-quality development more effectively.

This study analyzes the network structures of institutional shareholders and examines the influence of institutional investor cliques on corporate innovation. Our empirical results reveal that institutional investor cliques significantly enhance both innovation input and output. To mitigate endogeneity concerns and establish causality, we adopt multiple empirical strategies. Further evidence suggests that the beneficial impact of institutional investor cliques on firm innovation can be attributed to increased innovation investment efficiency, enhanced employee productivity, reduced information asymmetry, and decreased managerial myopia. Additionally, we find that the positive effect of institutional investor cliques on firm innovation is more pronounced in non-state-owned enterprises and is particularly evident in firms with severe agency conflicts, CEO duality issues, highly competitive product markets, and for firms that have low stock liquidity.

Fintech has significantly influenced the traditional financial industry by introducing advanced technologies and innovative business models with profound impacts. We aim to study the effect of Fintech development on labor allocation efficiency, and to explore its underlying mechanisms. Using a set of companies on Chinese A-share market over the years of 2011- 2020, we find that Fintech development plays a positive role in labor allocation efficiency, mainly through suppressing labor overinvestment. This positive effect is further reinforced by market competition. In addition, our investigation reveals that the primary pathways through which Fintech enhances labor allocation efficiency are lowering information asymmetry, mitigating agency issues and substituting low-skilled labor. Moreover, we show that the dimensions of depth and digitalization are particularly important in improving labor allocation efficiency among the three dimensions of Fintech development. Lastly, we find that Fintech development enhances total factor productivity by improving labor allocation efficiency.

In an increasingly open and transparent information environment, negative media coverage of Environmental, Social, and Governance (ESG) issues would detriment focal firms’ legitimacy and performance. However, we have a limited understanding of whether negative media coverage of supply chain partners would spill over to focal firms. Using a panel dataset from Chinese listed firms, we examine the research question at a dyadic (i.e., focal firm and supplier or customer) level. This study reveals that negative media coverage about supply chain partners’ ESG issues can cause a spillover effect, negatively impacting the focal firms’ financial performance. Notably, the extent of this impact is contingent on the reach of the media sources and the severity of the coverage. We also show that focal firms are more impacted by supply chain partners with stronger relationships and greater market power. Our findings underscore the importance of actively managing partners’ ESG issues to avoid potential financial losses within a multi-tier supply chain. This study has fruitful contributions to the literature on supply chain sustainability and the spillover effect in dyadic relationships.

We empirically investigate the impact of state ownership on the private economic value and the scientific value of Chinese publicly listed firms’ innovation from 2003 to 2020, and explore its mechanism. We show that the stock-market-based methodology of estimating patent value proposed by Kogan et al. (2017) applies to the Chinese economy, and follow their approach to evaluate patents issued to Chinese listed firms. Using this new data and patent citation data, we find that state-owned enterprises have lower private value of innovation than non-state-owned enterprises, while their scientific values of innovation are not significantly different. We also provide evidence that the state-owned enterprises’ low profit-oriented R&D performance is due to their insufficient capabilities rather than ownership-specific corporate objectives.