Abstract
Enterprises' investment response to China's carbon regulation policy is essential to the country's high-quality development. Using a difference-in-differences model, we investigate the differential impacts of China's Low-carbon Pilot (LP) program on both state-owned enterprises (SOEs) and non-SOEs, in order to reveal the differences in response to government intervention. The results show that the LP program has a negative effect on the productive investments of non-SOEs, but SOEs show unclear effect from the LP program. This conclusion remains credible after robustness tests. The negative impact of the LP program on the productive investments of non-SOEs is particularly evident in carbon-intensive sectors and large enterprises; investment diminishes in correlation with increases in the carbon intensity reduction targets. China's LP program is found to cause a decrease in the available credit resources and an increase in financing costs, in addition to a loss of technical efficiency and a reduction in investment willingness for non-SOEs, resulting in reduced productive investments.
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