Evaluation of contagious effects of China's wind power industrial policies

Abstract

In order to promote the sustainable development of the wind power industry, the Chinese Government has issued a series of related industrial policies. The promulgation of these policies not only greatly promotes the development of China's wind power sector, but may also generate potential contagion effects on other industries. This paper uses contagion tests based on linear dependence and higher-order co-moment statistics, such as co-skewness, co-volatility, and co-kurtosis, etc., to examine the contagion impacts of 8 relevant policies on 10 major economic industries in China for the period 2001–2018. The empirical results show that the wind power notices provide significant evidence of policy contagion than the national energy policies. Tail risk is more important in driving policy transmission as evident by third and fourth order co-moments which are significantly stronger than the correlation channel. It is not surprising that the financial sector is the industry most affected by the wind power sector in China, followed by the sectors of industrials and utilities which are closely related to the wind power.