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on China |
| By: | Shuang Zhang; Douglas Almond |
| Abstract: | China launched a nationwide, rate-based carbon market in 2021. Covering the world’s top CO2 emitter, compliance depends on the intensity of carbon emissions rather than an absolute cap. We draw on the theoretical literature of rate-based systems to provide the first empirical evidence on an early adopter. Using plant-level data from satellite imagery and machine learning methods, we find that high-efficiency power plants increased electricity generation and CO2 emissions by approximately 5% relative to low-efficiency plants. Because its carbon market regulates nearly all coal plants in China, we focus on the differential responses by plant efficiency, finding no evidence of a differential reduction in emission intensity (though these estimates are imprecise). Relative to coal plants in Indonesia and the Philippines, which had no carbon market, China’s high-efficiency plants also increased emissions, while the estimate for its low-efficiency plants is small and insignificant. This pattern of responses suggests that emissions increases of high-efficiency plants exceeded substitution away from low-efficiency plants. Underscoring the production stimulus to more efficient Chinese plants, air quality worsened downwind of high- efficiency plants relative to low-efficiency plants, compromising air quality in relatively clean areas of China. If China's goal is to reduce its carbon emissions, then benchmarks will need to be tightened within the existing system or an alternative system that does not simultaneously incentivize electricity production will need to be adopted. |
| JEL: | Q48 Q5 Q53 Q54 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35924 |
| By: | Beata Cichocka (Center for Global Development); Ian Mitchell (Center for Global Development) |
| Abstract: | This paper updates an earlier analysis of China’s role across multilateral development banks, vertical funds, and development-oriented UN entities, examining China as shareholder, contributor, borrower, recipient, and institutional actor. It also estimates China’s attributable multilateral climate finance under the accounting approach relevant to the $300 billion climate finance goal agreement at COP29. We find that China’s contributions to the development-oriented multilaterals covered have grown more than tenfold since 2010, reaching over $3 billion in 2024, but remain highly selective. Recent growth is concentrated in multilateral development bank concessional windows, especially the International Development Association, and in attributable multilateral development bank climate finance, which reached $5.3 billion by 2025. China remains a modest vertical fund donor and a limited voluntary UN funder. These trends, alongside China’s likely transition to high-income status, matter for debates about multilateral burden sharing and institutional reform. |
| Date: | 2026–10–08 |
| URL: | https://d.repec.org/n?u=RePEc:cgd:ppaper:406 |
| By: | Nicholas R. Lardy (Peterson Institute for International Economics) |
| Abstract: | The differing findings of the OECD and IMF studies highlight the challenges of accurately measuring Chinese industrial subsidies, making the estimates unreliable for shaping trade policy. Policymakers should avoid using disputed figures to justify protectionism. Greater data transparency and clearer explanations for discrepancies between estimates are essential to help policymakers formulate effective trade policies. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:iie:pbrief:pb26-16 |
| By: | Zeng, Weishen |
| Abstract: | China is recognised as the leading country in the green energy transition. Different from the literature that emphasises the role of the powerful central state, this article reveals how China's green energy strategies and policies can also be reshaped by local dynamics. Based on ethnographic research in 2022 and interviews with local officials and villagers, this article interrogates the building of ‘the world's largest desert photovoltaic (PV) power base’ in Dalad, an Inner Mongolian county in northwest China. The article makes two arguments. First, the base project should be seen as a product of what I term ‘growth-driven environmentalism’, which characterises the local state's mediation between the top-down energy strategies and the bottom-up developmental needs. Second, while the base project may be viewed as a successful climate action in its own right, it obscures the concurrent acceleration of coal-based industrial growth and entrenches the energy-based development model in Dalad. This article offers a theoretical contribution to our understanding of the role of the local state in reconstructing and reshaping the green energy transition, alongside the powerful central state, and suggests that understandings of the global green energy transition must step past the macro picture to understand what is on the ground. |
| Keywords: | growth driven environmentalism;green energy transition;local state;Inner Mongolia;China |
| JEL: | J1 |
| Date: | 2024–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:141404 |
| By: | Minnich, John |
| Abstract: | This article examines China’s efforts to accelerate its economic rise using technology absorption policies, or measures that condition foreign market access on technology transfers to domestic firms. I argue bureaucratic fragmentation and China’s position in global value chains (GVCs) constrain its bargaining power over foreign investors, limiting the use of tech absorption policies even in highly strategic industries such as semiconductors. Case studies and analysis of a new industry-level dataset from 1995-2015 suggest centralizing reforms facilitated increased use of tech absorption policies in strategic industries over time. However, China’s reliance on foreign firms to drive export growth and associated employment undercuts tech absorption efforts in strategic industries in which it occupies an intermediate position in GVCs. My findings show how regulatory institutions and GVCs shape the political economy of bargaining over technology transfer between states and firms, and how position in production networks influences the strategic choices behind China’s rise. |
| Keywords: | rise of China;technology transfer;global value chains;foreign direct investment |
| JEL: | O33 F23 P26 |
| Date: | 2026–10–07 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129489 |
| By: | Larsen, Mathias |
| Abstract: | What explains China's global dominance of green industries? Here, I show that China's politics determine its growth model, and the growth model fosters clean tech development. First, China's authoritarian politics entail a growth-security trade-off, a preference for investment and exports, the elimination of powerful industrial coalitions, and a high degree of state capacity. Second, clean industries fit all of these four dimensions: 1) They reduce reliance on energy imports and allow China to keep green supply chains within its control. 2) They provide new drivers of investment and exports as real estate and low-skilled manufacturing lose their ability to drive growth. 3) No incumbent industrial coalition can resist their expansion, as the same stateowned companies often own both clean and dirty assets. 4) Finally, without electoral or legal constraints, the party-state supports them through supply-side, demand-side, and macro-structural policies. Consequently, China has achieved green growth by decoupling emissions from growth. However, emission-intensive industries also fit the growth model, meaning the shift to clean technologies is, so far, proportional rather than nominal. Further progress requires either political and economic reform, which is unlikely, or technological progress that lets clean technologies outcompete fossil alternatives. |
| JEL: | R14 J01 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:141319 |
| By: | Ziaba, Isaac |
| Abstract: | How do governing parties regulate informal miners and what explains regulatory response variations? Drawing on Ghana and leveraging original and secondary data, this paper shows that National Democratic Congress (NDC) incumbents tolerated most local miners even when President Mahama raided the informal mining sector. By contrast, while the New Patriotic Party’s (NPP’s) Kufour and Akufo-Addo attacked local miners, Akufo-Addo largely let off Chinese miners and their local collaborators. These dissimilar regulatory responses arise because most local miners appear electorally more salient to the NDC. By contrast, NPP political entrepreneurs cultivated economic ties with Chinese miners while this governing party got hugely indebted to China and was accordingly constrained from sanctioning Chinese miners and their local collaborators. Taken together, I argue that the differential electoral relevancies of local miners to Ghana’s dominant and rival parties, economic ties between domestic political entrepreneurs and Chinese miners, and indebtedness to Beijing can make mining groups more or less salient to parties, producing targeted responses of repression and forbearance.Such instrumental responses undermine ASM formalization, beckoning international financial institutions to tie credit and loan facilities to concrete formalization indicators, which could compel governing elites to adopt non-partisan, holistic, practical, and long-term formalization approaches. |
| Keywords: | political parties;Ghana;China;informal mining;galamsey |
| JEL: | R14 J01 |
| Date: | 2026–10–15 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:141097 |
| By: | Bo Feng; Qiwei He; Xin Jin; Xu Xu |
| Abstract: | Why are government jobs so attractive to talented individuals in many non-democratic countries? We identify state power expansion as a key factor. We analyze the impact of China’s recent value-added tax reform, an expansion of taxation power, on citizens’ preferences for tax administration positions revealed by participation in the National Civil Service Exam. Using a difference-in-differences approach that leverages pre-reform subnational tax composition variations and a dataset of166, 012 government job openings from 2010 to 2021, we find that the reform has attracted more and higher-ability individuals to tax-related state positions. The effect is particularly strong for positions involving greater regulatory power or those located in prefectures with higher graft opportunities. An original survey reveals that exam takers perceive increased power and benefits in tax agencies after the reform. Evidence from Chinese General Social Surveys suggests the talent drawn to the state likely comes from the private sector. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:not:notnic:2026-13 |
| By: | Artuc, Erhan; Barattieri, Alessandro; Noukwe, Isambert Leunga; Mattoo, Aaditya |
| Abstract: | Three key developments, protectionism, aging, and automation, are affecting the global pattern of industrial production and trade. While these trends affect many countries, they are especially consequential for China, which currently dominates global manufacturing. Using a multi-country model fitted with global trade and robotization data, this paper shows that automation can mitigate the adverse effects of protection and aging on competitiveness, particularly in sectors with a high share of automatable tasks. The impact of a 10 percent decline in labor force in China would be offset by doubling of robot productivity in vehicles, but robot productivity would need to more than triple in computers. |
| Date: | 2026–09–28 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11468 |
| By: | Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Sjöholm, Fredrik (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Chinese acquisitions of Western firms have become central to debates over technology transfer, national security, and investment screening. Understanding their economic consequences requires evidence on how acquired firms perform and reorganize under Chinese ownership. Using linked Swedish firm and worker registers for 1997–2021 and a matched, stacked difference-in-differences design, we examine majority acquisitions by Chinese and other foreign owners. Other foreign acquisitions raise labor productivity by about 6 percent and employment by about 14 percent on average, alongside increases in total factor productivity, workforce skills, and trade intensity. They also reshape management, strengthen trade links with the acquirer’s home country, and increase workers’ mobility to multinational enterprises. For Chinese acquisitions, we find no statistically detectable improvements in firm performance or comparable evidence of management restructuring, worker mobility, or trade integration. Chinese acquisitions are also rare in industries classified as security-sensitive. These findings provide a detailed account of the economic footprint of Chinese ownership in an advanced host economy. The pattern is consistent with acquisitions seeking assets valuable to the parent group rather than gains through restructuring the target. |
| Keywords: | Geoeconomics; Chinese Acquisitions; Foreign Direct Investment (FDI); Firm Performance; National Security |
| JEL: | F21 F23 G34 L25 |
| Date: | 2026–10–06 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1569 |
| By: | Goodrich, Jimmy; Martin, Jackson |
| Abstract: | Advanced scientific light sources are foundational research infrastructure for semiconductor manufacturing, biomedicine, energy storage, and nuclear weapons stewardship. This report examines China’s pursuit of “photon sovereignty” through the rapid expansion of a domestically controlled network of synchrotrons and X-ray free-electron lasers. Drawing on open sources, it identifies approximately sixteen operational light sources and at least twenty-one additional facilities under construction or active planning, with known investment in ongoing projects approaching $13 billion. This expansion is broadening China’s scientific capabilities, reducing dependence on foreign infrastructure, and increasing access to advanced facilities across universities, research institutes, and industry. The strategic effects will be cumulative: more beamtime, broader spectral coverage, faster experimentation, and a larger trained user community could accelerate advances in foundational science, technology, and military capabilities. For the United States, China’s expansion presents a dual challenge: protecting sensitive research while sustaining the infrastructure and scientific workforce needed to maintain U.S. leadership in photon science. |
| Keywords: | Social and Behavioral Sciences, Photon sovereignty, China science and technology policy, Semiconductor manufacturing, X-ray free-electron lasers |
| Date: | 2026–10–14 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:globco:qt7tj61937 |
| By: | Zeng, Weishen |
| Abstract: | Multilateral development banks (MDBs) play a key role in directing private capital and public resources to finance climate action. Different from the mainstream literature that focuses on the role of new MDBs in promoting climate finance, this paper provides novel evidence on how and why they can also be reshaped by climate finance. It takes as a case study the Asian Infrastructure Investment Bank (AIIB), a newly established yet now the world’s second largest MDB by membership, drawing on the bank’s climate trajectory since 2016, and 57 in-depth interviews with its officials and experts in Beijing, China. While initially created as an infrastructure-focused MDB, AIIB has been substantially shaped and reshaped into a climate-oriented bank. The shift is explained by the bank’s (1) financial considerations, (2) strategic considerations, and (3) organizational culture. The co-productive interaction entails two long-term effects. First, despite its geostrategic intentions and institutional setbacks, AIIB carved out an extra space for itself to grow. Second, there is an increasing risk of AIIB’s unique developmental identities being weakened as it leans towards climate finance. |
| Keywords: | Asian infrastructure Investment Bank (AIIB);climate finance;development finance;multilateral development banks (MDBs) |
| JEL: | F3 G3 |
| Date: | 2024–12–25 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:141407 |
| By: | Nicolas Dietl; Susanne Keller; Sebastian Krautheim |
| Abstract: | Geopolitical tensions threaten to fragment the global economy into rival blocs. As a driver of this fragmentation, we propose a demand-side channel grounded in social identity theory: consumers value goods partly by the political and economic values embodied in their origin. We embed this in a trade model with two countries that are similar in terms of political values and one dissimilar country, with the US, the EU and China as our benchmark example. We show that a geopolitical shock raising the salience of political over economic values diverts trade toward the similar pair and can also make a previously unattractive standards-harmonization agreement between them mutually beneficial. A subsequent estrangement of the similar pair, through diverging political values or trade-war measures, can reverse both effects and push the world economy from two blocs toward three. We also apply the framework to an estrangement of the US from the EU and Canada. Both a US divergence in political values and trade-war measures divert trade toward the EU-Canada pair, but only the former can make a previously unattractive EU-Canada agreement mutually beneficial. |
| Keywords: | globalization backlash, friend-shoring, geopolitics, social identity, identity politics, trade agreements, TTIP, value-based trade |
| JEL: | F02 F13 F15 F50 D91 Z13 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13053 |
| By: | Jan Morgan; Anchi Xia |
| Abstract: | We provide a theory of optimal trade sanctions with three strategic players: Home (sanctioner), Foreign (target), and Bystander. Bystander may act unilaterally or ally with either party subject to a participation constraint. We derive three novel results. First, members of a coalition generically set different tariffs either under Stackelberg timing or when transfers are imperfect. Second, as sanctions tighten, Home's welfare can improve even beyond the unilateral terms-of-trade optimum due to strategic interactions. Third, we characterize feasible sanctions targets when Home and Foreign compete for Bystander's support. An alternative implementation arises with competition: Home lets Foreign win, but Foreign's transfer to Bystander implements the sanctions target. We apply our model to sanctions against Russian crude. In a calibration exercise, cooperation among India, China, and Russia best matches observed data. Sanctions could have been roughly 70% more effective had China and India acted unilaterally or had the sanctioning coalition made them a better offer. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.22830 |
| By: | Christopher Clayton; Antonio Coppola; Vanessa Hu; Matteo Maggiori; Jesse Schreger; Serdil Tinda |
| Abstract: | The increasing use of geoeconomic pressure is reshaping the global economy. We introduce a methodology using large language models (LLMs) to systematically measure the application of and response to geoeconomic pressure from large textual corpora, classifying which governments apply pressure to which foreign targets, using which in struments, firms, and products. Most importantly, we use LLMs to analyze how and why firms respond to the pressure. We focus on export controls, sanctions, and tariffs as the main instruments of pressure on firms. We find that export controls induce the targeted firms to undertake domestic R&D to build a domestic alternative technology. Western sanctions on Russia cause supply chain re-arrangements, the major beneficiary of which are firms in third-party countries, like China and India, which step into the market vacuum created by the broken business relationships. The threat and impositions of U.S. tariffs cause losses for the majority of U.S. firms, which report absorbing the cost shock on their inputs via their profit margin. Foreign firms are also negatively affected, mostly via the related macroeconomic uncertainty and the cost of relocating production. |
| Keywords: | artificial intelligence, LLMs, economic coercion, economic security, economic statecraft, economic dependency, chokepoints, sanctions, export controls, tariffs |
| JEL: | C4 F3 F4 F5 G3 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1386 |