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%

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".

This paper selects 346 green bonds issued in China from 2016 to 2021 as the sample, and the Propensity Score Matching (PSM) method is employed to confirm the existence of ‘green premium’ in the Chinese bond market. On this basis, data on internet media sentiment and print media sentiment are collected from ‘Sina Weibo’ and ‘China Important Newspaper Full Text Database’ by both Web Crawler Technology and Textual Analysis Methods to explore the impact and the mechanism of heterogeneous media sentiments on the ‘green premium’. The results show that both the optimism of internet media and print media can significantly promote the ‘green premium’ of green bonds, and the influence of print media sentiment on the ‘green premium’ is greater than that of internet media sentiment. In addition, the Bootstrap method verifies the mediating effect of print media sentiment in the influence of internet media sentiment on ‘green premium’, indicating that print media sentiment is an important transmission path. Moreover, the results of the heterogeneity test show that the more optimistic the media is, the more significant the ‘green premium’ effect is in the regions with higher institutional environments and financial subsidy policies. The ‘green premium’ of green bonds is most pronounced for higher levels of institutional environment and green bond preferential policies.

We estimate the financial and real effects of a subsidy program on imported capital goods recently implemented in China. We identify ffrms that have access to the subsidy program by combining data on catalogues of eligible products periodically released by the government and product-level import data. Our findings demonstrate that following the implementation of the program, eligible firms experience an increase in borrowing and gain access to loans at lower interest rates compared to non-eligible firms. This improved financial situation enables them to expand their fixed-asset investments, increase total output, and enhance their export performance. The expansion of production capacity also leads to improved investment efffciency and greater profitability. Further analysis reveals that the effects of the policy are particularly pronounced for non-state-owned enterprises and small firms in relatively competitive industries. This finding suggests that these firms face ex-ante financial constraints, and their marginal rate of return to capital is large.

This work explored the changes in production decision-making trends of Chinese steel enterprises under the influence of the carbon border adjustment mechanism. First, using evolutionary game theory, the interactive mechanism of complex production strategies among steel enterprises considering the carbon border adjustment mechanism was studied, including the impact of government subsidy coefficients, additional profits and carbon tax prices on enterprise decisionmaking.Second, the influence of key parameters on the dynamic evolutionary process was analysed. On this basis, the empirical simulation method was used to verify the game model and the main conclusions. Finally, the sensitivity analysis of the selected parameters was determined using Matlab software. The results showed that additional profits from green investment, government subsidy coefficients, input-output values and carbon tax prices had a higher impact on the evolution of enterprise production strategies. The results of this study provide a decision-making basis for the selection of future production methods for steel enterprises.

We examine communication of political connections in corporate China, and show that politically inclined positive words—words in connotation of political sentiment—serve as a distinct and effective signaling device for corporate political connections. Using a large sample of corporate news, we find that news’ political sentiment, instead of orthodox political measures such as occurrences of political nouns and political entities, reflects executives’ political connections for private enterprises, and is related to rent-seeking benefits in government subsidy, tax refund, financing constraints and political risk. Our results demonstrate that political sentiment is an effective way to decode subtle corporate political connections in modern China’s “Mind Politics” environment that infiltrates into private corporations.

Based on the matching data of China’s industrial enterprise database and enterprise patent database, this study investigates the effect and mechanism of government subsidy policy on the innovation performance of Chinese enterprises using the panel data matching and multi-period difference-in-difference model. Results show that the incentive effect of government subsidy policy on enterprises’ innovation performance is dominant, thus improving the innovation performance of Chinese manufacturing enterprises. However, the promotion effect on lowquality innovation is greater than that on high-quality innovation. Moreover, the government subsidy policy affects the innovation performance of enterprises by stimulating enterprises to increase their R&D investment, increasing the spending on rent-seeking and taking on more social responsibility. The government subsidy policy significantly affects the innovation performance of non-state-owned enterprises, small and medium-sized enterprises, and technology-intensive industries. The impact of government subsidizing policies varies regionally. The policy effect on enterprise innovation performance is significant in the eastern and central regions but not in the western and northeast regions.

In recent years, the attempt to curb state-owned enterprises (SOEs) has resulted in dedicated rules in trade agreements. This paper reveals significant paradigm shifts in cross-border SOE regulation by exploring the emerging SOE rules and contrasting them with SOE disciplines in WTO agreements. First, the emerging SOE rules shift the emphasis from regulating trade measures to the competitive behaviour of SOEs. More importantly, the emerging SOE rules are characterized by excessive focus on behaviour analysis and a per se approach. Under a per se approach, a violation of the emerging SOE rules could be established regardless of whether the behaviour of an SOE caused a harmful trade or competition effect. Finally, in light of SOE reform in China, the article contends that the emerging SOE rules’ behaviour analysis deviate cross-border SOE regulation from its primary goal of levelling the playing field.