This study identifies an incentive-compatible mechanism to foster individual environmental engagement. Utilizing a dataset comprising 100,000 randomly selected users of Ant Forest—a prominent personal carbon accounting platform embedded within Alipay, China's leading BigTech super-app—we provide causal evidence that individuals strategically engage in eco-friendly behaviors to enhance their credit limits, particularly when approaching borrowing constraints. These behaviors not only illustrate the green nudging effect of BigTech but also generate value for the platform by leveraging individual green actions as soft information, thereby improving the efficiency of credit allocation. Using a structural model, we estimate an annual green value of 427.52 million US dollars generated by linking personal carbon accounting with BigTech credit. We also show that the incentive-based mechanism surpasses green mandates and subsidies in improving consumer welfare and overall societal welfare. Our findings highlight the role of an incentive-aligned approach, such as integrating personal carbon accounts into credit reporting frameworks, in addressing environmental challenges.

This paper examines the spillover effect of environmental regulations on firms’ green technological innovation, from the perspective of supply chain relationships. Analyzing data from Chinese listed companies, we find that the average environmental regulatory pressure faced by the client firms of a supplier firm enhances the green patent applications filed by the supplier firm, indicating that environmental regulatory pressure from clients spills over to suppliers. When the industries of suppliers are more competitive or the proportion of their sales from the largest client is higher, suppliers feel more pressured to engage in green innovation, resulting in more green patent applications. Thus, via their negotiation power, client firms can prompt supplier firms to innovate to meet their demand for green technologies. Finally, we show that this effect is particularly pronounced when supplier firms are located in highly marketized regions, receive low R&D government subsidies, or have high ESG ratings.

The e-CNY, with its information transparency and financial inclusion, activates an innovative solution to cure the financing obstacles among the small and medium enterprises in China. The research establishes a game model between enterprises and commercial banks embedded in information asymmetry, and incorporates the e-CNY payment choice within the framework to analyse the cure effect of e-CNY on enterprise financing obstacles. With equilibrium results calculated, it simulates the outcomes of changing parameters on the behaviours of enterprises and banks. The findings involve that, based on the incremental utility of e-CNY and subsidies attached, e-CNY is preferred in transaction, reducing the bad debt risk caused by misalignment when both achieving excess returns. The People’s Bank of China must strengthen a more transparent publicity of e-CNY and structure an inclusive system of financial regulation to well use digital currency and realise high-quality socio-economic development.

This study examines the enduring effects of China’s planned economy on contemporary social attitudes. By leveraging spatial disparities in the historical distribution of state-owned enterprises and external shocks such as the First Five-Year Plan and the Third Front Construction movement, we find that a one percentage point increase in the historical SOE proportion of industrial output corresponds with a 0.57% to 0.89% increase in the contemporary preference for state-owned sectors. The results are robust after controlling the contemporary SOE employment share, and this effect does not apply to the younger generation born after the marketization reform. Furthermore, we provide evidence that city-level state ownership preferences significantly impact the likelihood of SOEs receiving subsidies, with this effect notably amplified in cities governed by locally-born leaders, but the share of locally-born leaders has been trending down.

Using the data of Chinese listed firms from 2003-2020, this study applies a System GMM estimation approach to document that high local government ecological concerns increase a firm’s stock price crash risk. This finding remains consistent after addressing endogeneity issues and undergoing robustness checks. This study also reveals that the implementation of the new environmental protection law in 2015 mitigates the relationship between local government ecological concerns and stock price crash risk. Further analyses indicate that stricter environmental regulation and high subsidies, as well as enhanced corporate social responsibility and governance, can effectively alleviate the adverse effect of local government ecological concerns on stock price crash risk. In addition, we note that the influence of local government ecological concerns on stock price crash risk is more significant in the eastern region, heavily polluting industries, and non-SOEs. Lastly, the research identifies two potential channels through which local government ecological concerns can impact stock price crash risk by reducing the quality of information disclosure and intensifying investor disagreement.

This study examines the effects of the robotic subsidy policy in China’s manufacturing sector. The demand-side subsidy policy aims at encouraging manufacturing firms to invest in robotics by lowering the cost of purchase. Our difference-in-difference analysis reveals distributional impacts of municipality-level robot subsidies on manufacturing firms of different scales. Although the subsidy brings a 14.2% increase in the application of robot patents, the facilitated access to robotics has not transformed into new firm entries. Strikingly, new firm entry decreases by 23.5% after the policy implementation. On the other hand, robot subsidies have increased the revenue, total asset, and employment of larger manufacturing firms by 9.8%, 6.9%, and 6.7%, respectively. To interpret the mechanism, we develop a simplified framework incorporating financial frictions into a task-based model. The model reveals that idiosyncratic borrowing costs lead to an inefficient equilibrium by generally depressing automation adoption and creating automation dispersion across firms. Such ex-ante distortion results in a uniform subsidy disproportionately benefiting firms with better capital access, thus creating a trade-off in terms of efficiency: while the subsidy can enhance overall automation, it simultaneously exacerbates automation dispersion. To quantify the efficiency implications, we embed this simplified model into a dynamic heterogeneous-agent framework, calibrated to the 2010 productivity distribution, financial frictions, and robot density in the industrial sector in China. Our dynamic model reveals that a 20% robot subsidy narrows the gap between mean and optimal automation level by 22% percentage points, while raises automation dispersion by 49%. This results in a 1.23% increase in aggregate output at the cost of a 2.40% decline in TFP. This dynamic model proposes a novel mechanism that automation exacerbates capital misallocation by enlarging asset accumulation dispersion between workers and entrepreneurs. Controlling for this dynamic feedback could enhance the subsidy-induced output gain by an additional 26%

As a vital documentation for assessments, rewards and punishments in terms of political promotions, the intellectual property pilot city policy (IPPC), an strategic incentive measure to enhance innovation capacities at the city and firm level, may play a prominent role in innovation fostering in China. Yet patent bubbles that focus more on quantity over quality have been thrown into doubt, as local cadres and firms shall pay more attention to the easier observable low-quality innovation performance amid the pressure of political task. this paper conducts an investigation that drew upon listed firm data from 270 prefecture-level cities and employs a PSM-DID design to evaluate the IPPC policy effectiveness on innovation quality and innovation quantity. The results are obvious: The policy have boosted the number of innovations, but has a limited effect on improving the quality of innovation. We further apply a hierarchical liner modeling approach to deal with the stratified cityand firm-level data and to verify the mechanism through which policy distortions may affect corporate innovation. There also gives evidence that the IPPC policy comes into effect mainly through financial subsidies, institutional supply and the intensity of IPR protection at the local scale. This report concludes by proposing further policy implementations for the future optimization of China’s innovation strategies.

This paper investigates the varying impact of government subsidies on corporate investment efficiency using micro-level data from Chinese listed firms. Through meticulous compilation of information on government subsidies revealed in financial statements, and the implementation of an innovative categorization methodology based on the nature and timing of funds (ex-ante versus ex-post), we shed light on the divergent effects of these subsidies. Our findings are as follows: (1) Government subsidies enhance corporate investment efficiency, yet their effects exhibit asymmetry by alleviating underinvestment while exacerbating overinvestment. (2) Functional subsidies exert a stronger influence on investment efficiency compared to selective subsidies. Specifically, functional subsidies prove more effective in addressing underinvestment, but also possess a higher likelihood of exacerbating overinvestment. (3) State ownership, firm size and dividend payments lead to heterogeneity in the effects of subsidies. (4) Corporate financial constraints serve as one of the mechanisms through which subsidies affect investment efficiency. This suggests that firms with easier access to financing may not effectively utilize subsidies, while those facing severe financial constraints are less prone to misusing them.

The past three decades have witnessed the boom of patents and mounting place-based innovation policies (PIPs) in China. However, the PIP-innovation nexus, particularly the distortion effect and underlying mechanisms, remains poorly understood. Matching micro-level patent data and industrial firm data, we documented a promotion effect of PIPs on local firm innovation measured by both patent quantity and quality. Moreover, we observed a distortion effect on patent quality following the 2008 crisis, primarily originating from privately owned enterprises rather than stateowned ones. Drawing from theories of technological learning and the unique institutional characteristics of PIPs in China, we have further unpacked the underlying mechanisms driving these effects: Both industry-academia collaboration and foreign direct investment play significant roles in the PIP-innovation nexus, and the latter appears to be particularly influential in causing the distortion effect. Additionally, our analysis has revealed that preferential policies, such as patent subsidies and reductions in land prices, are instrumental in enabling PIPs to exert their impact.

The disordered and rampant local tax incentives have interfered with regular business competition and resource allocation, and whether they have the rationality of existence has also become an urgent problem to be clarified. In China, the government has undertaken a new round of policy adjustment to comprehensively sort out and standardize tax incentives, trying to realign value-oriented tax competition among local governments. Thus, this paper examines the real effect of standardizing tax incentives using China's State Council documents Nos. 62[2014] and No. 25[2015], with the measurement of abnormal tax burdens and abnormal fiscal subsidies. The result shows that this round of policy governance has maintained the steadiness of the overall tax burden and fiscal subsidy, and only abnormal tax burdens and fiscal subsidies have been reduced through structural adjustment; In addition, it has also taken into account the difference among regional economic development. The governance in the Midwest is generally lighter than in the East. Meanwhile, the effect of governance among different property companies has presented a reduced tendency as "state-owned enterprises -- local state-owned enterprises -- private enterprises".