Chinese Local Governments Research Articles

Official Turnover and Embodied Carbon Emissions: Evidence From Industrial Linkages in China's Prefecture‐Level Cities

ABSTRACTCarbon emission is the most critical environmental pollution issue today. However, regional trade and industrial linkages have changed the traditional carbon emission pattern. As a public product with strong negative externalities, carbon emissions inevitably lead to severe consequences if the market is allowed to adjust itself. Therefore, public policies made by government officials have an important role in environmental governance and emission reduction. This paper uses China's Multi‐regional Input‐Output (MRIO) table and official turnover data of 269 prefecture‐level cities in China for the empirical test. The results show that official turnover has a significant positive impact on embodied carbon emissions between regions. Heterogeneity analysis shows that the inter‐provincial turnover of officials and the turnover between regional central cities results in more significant embodied carbon emissions. Further research finds that the longer the officials stay in their previous positions or as new local government leaders, the greater the embodied carbon emissions caused by their turnover. In addition, the turnover of officials affects interregional embodied carbon emissions by promoting regional entrepreneurship, venture capital and structure transformation of industries. The findings of this paper provide essential enlightenment for optimizing Chinese local government governance and promoting the transformation of the economic development mode.

Can digital economy mitigate vertical fiscal imbalances in Chinese local government? The role of fiscal transparency

Can digital economy mitigate vertical fiscal imbalances in Chinese local government? The role of fiscal transparency

How Do “One-Time Bidding, Average Price Win” Land Auction Rules Affect Land Prices: A Quasinatural Experiment in Suzhou, China

The land price reflects the supply and demand relationship in the land market and plays an important role in regulating land use. Improving land auction rules is of great significance for avoiding abnormal fluctuations in the land market and promoting the sustainable use of land resources. To regulate the abnormal fluctuations in the state-owned land use rights’ auction prices, Chinese local governments have implemented a “sealed one-time bidding, average price wins” rule. However, limited theoretical and empirical research that assesses its policy impact exists. This study examines the policy motivations behind this rule, constructing three game models; namely, static complete information, static incomplete information, and multiperiod repeated games. By deducing bidding strategies and equilibrium results, hypotheses are formulated. A baseline difference-in-differences (DID) and a dynamic policy effect model are designed, and the Python crawler is used to obtain 1182 microland auction samples in Suzhou. This study evaluates the impact of the one-time bidding rule on the starting prices, transaction prices, and premium rates. The empirical results underwent multiple robustness tests, eliminating potential endogeneity issues and biases. The results show that while the policy is effective in restraining the premium rate, indicating the bidding intensity in single-land auctions, it proves challenging to curb the long-term rise in land prices through continuous bidding auctions. Moreover, the policy may stimulate local governments to increase auction starting prices.

Besides tit for tat: The effect of US 301 tariffs on Chinese local government spending

Many studies have shown that the US-China trade war has harmed China's exports and economy. This paper analyzes whether local governments respond to US 301 tariffs through public spending. Using the variation of tariff exposure across cities, this paper finds that the tariff shock led local governments to increase public spending, mainly on social security and employment. Heterogeneity analysis indicates this effect was more pronounced in cities with higher openness, lower fiscal pressure, and lower saving levels. Robustness tests are provided.

Does local government debt promote firm green innovation? Evidence from the Chinese local government debt governance reform

Green innovation is a crucial strategy for fostering a green economy and achieving sustainable development. This paper focuses on the role of government debt in the sustainability of firm green innovation, particularly in the context of Chinese local government debt governance reform in 2014 (CLGDGR2014). By analyzing annual data of Chinese publicly listed firms from 2011 to 2018, the study explores the impact of CLGDGR2014 on firm green innovation and the underlying driving mechanisms. The findings suggest that CLGDGR2014 improves the firm green innovation, by alleviating firms' financing constraints and underscoring the productive function of local government debt in advancing new infrastructure development. The further analysis explores the impact of various types of debt on green innovation after CLGDGR2014 and indicates that explicit local government debt has a promoting effect while implicit local government debt is not obvious. In conclusion, this research offers new insights into leveraging and managing local government debt to stimulate green innovation.

Capturing the Asymmetrical Effect of Macroeconomic Factors on Public-Sector Innovation in Chinese Local Government: A Dynamic Technology Forecasting Approach

Despite the considerable investments in Chinese public sector innovation in China and its social impact, there is insufficient information on how asymmetries in macroeconomic factors and business cycles affect public sector innovation. Based on provincial data from thirty regions (2000–2016), the study proposes a dynamic model to capture the asymmetrical impact of macroeconomic factors on local government innovation. The innovation-based predictive model indicated that a positive shock to macro-economic factors (i.e., gross domestic product, government administration expenditures, provincial degree of openness in economies, provincial degree of openness in society, higher education research and development expenditures, local revenue, and local expenditure) upsurge government innovation. In contrast, a negative shock to these factors disrupts local government innovation. Third, the model indicated a pro-cyclical relationship between positive and negative shocks to government administration expenditures and provincial government innovation during the boom and recession periods. The study offers an essential policy tool and some important implications for local government officials, future researchers, and policymakers to understand how cyclic and asymmetric behavior in local government innovation shapes the innovation efficiency of the public sector in China. Subject Classification Codes: O30, O31, O32, 01, O38, O36, O35, O38, P25, Q01, H72.

WITHDRAWN: the Impact of Monetary Policy on the Liquidity of Bond Market——Based on Chinese Local Government Bond Market

The bond market serves dual roles in fiscal and financial spheres, playing a crucial role in coordinating monetary policy. This paper investigates the impact of quantitative and price-based monetary policies on the liquidity level of China’s bond market. A comprehensive index measuring the liquidity of the local bond market is constructed using a combination weighting method that integrates the entropy method and the coefficient of variation. Employing the time-varying stochastic volatility structure vector autoregression (TVP-SV-SVAR) model on data spanning from 2013 to 2021, the study empirically compares the impulse response of local bond market liquidity to monetary policy shocks. Findings reveal that both types of monetary policy operations exhibit asymmetric, nonlinear, and time-varying impacts on bond market liquidity. Quantitative monetary instruments induce deeper impulse responses, with longer-lasting effects. These conclusions offer insights for monetary policy reforms and bond market development in China.

Battle to Survive: The Association Between Accountability and Chinese Local Government Response to COVID-19

ABSTRACT China’s ability to sustain the zero-COVID strategy over three years has garnered global attention, but little is known about the factors contributing to its long-term adherence. Based on the political promotion tournament model, this article theorizes that China’s strict administrative accountability system, which tied local officials’ career prospects to their performance in crucial policy goals, incentivized local governments to sustain COVID-19 policies. Using data from the Oxford COVID-19 Government Response Tracker and major official Chinese media outlets, we performed interrupted time series analysis (ITSA) to examine whether the accountability events affected the local government’s COVID-19 responses. Noticeably, our analyses found that from May 4, 2020, to September 30, 2022, when an accountability event happened, officials in the affected (local effects) and unaffected (spillover effects) provinces all increased their containment responses and decreased their economic support responses. This is true even for provinces without new localized outbreaks. The effects of accountability events increased with decreasing geographical distance. These findings remain consistent after several robustness checks. The administrative accountability system is a key institutional factor in implementing China’s zero-COVID strategy, which contributed to the global literature about the pandemic policy process in centralized countries.

Decoding China's urban agglomerations policies: A scientific evaluation and exploration of economic benefits

Urban agglomerations planning policies are a critical driver for sustainable urban development. The Chinese central and local governments have implemented a series of policies to guide the development of urban agglomerations. However, the scientific soundness of these policies and their impact on promoting high-quality urban economic development have received limited attention. This study addresses this research gap by examining the scientific rationale of China's urban agglomerations policy formulation through the policy modeling consistency (PMC) index model. Then, it empirically assesses the economic effects of policy implementation using a difference-in-differences (DID) model based on statistical data from 182 cities spanning 2000 to 2021. The results show that: (1)while the overall level of urban agglomerations policies is excellent, there are areas for improvement, such as policy objectives, implementation, and financial support; (2) Urban agglomerations policies contribute to a 1.8% increase in high-quality economic development; (3) Mechanisms underlying policy effect include the scale effect of industrial agglomerations, the radiation effect of infrastructure construction, and the spillover benefits of advanced industrial structure. Moreover, the effects of policy vary across urban agglomerations of different scales, with larger urban agglomerations demonstrating more substantial benefits. The research outcomes provide valuable insights for policymakers in formulating scientifically and economically beneficial urban agglomerations policies.

Political burden of local government and land insider trading in major Chinese cities

ABSTRACT Chinese local governments transfer political burdens through land trading. One key example of this practice is the requirement for for-profit organizations to bid on land when undertaking public welfare projects. By analysing comprehensive data on public welfare project development in major Chinese cities, we conducted regression analyses and endogeneity tests to explore whether there is a causal relationship between the political burdens faced by for-profit organizations and their land trading priorities, with a focus on insider trading characteristics. Our findings reveal that, even in marketized transactions, the land designated for public welfare projects tends to have lower prices and bidding premiums, reflecting key insider trading traits. Price priority is more apparent among private developers, indicating higher compensation for political burdens, while premium priority is more evident among government-controlled enterprises due to increased paternalism.

Industrial Chain Leader System for green governance: Evidence from a Chinese resource‐based city

AbstractThe Chain Leader System (CLS) is a novel concept of industrial development proposed by the Chinese local government. Initially, it was aimed at chain extension, supplementation, and advancement to address the impact of external uncertainties. However, there has been debate about whether political power from CLS will lead to inefficiencies in green governance. This study aims to formalize industrial CLS for green governance. A survey was conducted to assess public acceptance and the validity of CLS in a resource‐based city. The results indicate that CLS, when aligned with green governance goals, effectively corresponds with market rationality and public value. It is evident that CLS represents a collective effort toward effective governance rather than simply extending industrial chains or enhancing resilience. The efficiency of green governance within CLS is influenced by the factors including communication platform, enterprises' carbon sinks and green clustering, citizens' adoption of green transportation, and communication among different stakeholders. This study provides valuable insights for the governments seeking to establish an efficient CLS that aligns with both market principles and well‐functioning government.

Smart Practice of Integrating Administrative Management and Human Resources of Chinese Local Governments under the Background of Digital Transformation

Local Chinese governments face a challenge in improving the efficiency and quality of services provided during administrative management in the digital transformation era. The present study identifies three prime drivers for integration—technical, organisational efficiency, and policy support. Finally, it runs the hypotheses through the structural equation model for 133 data points from the questionnaire prepared for the local government administration. Superior integration is primarily contributed to by as discussed, technical support, organisational efficiency, and policy suit will improve effective management and organisational efficiency while reducing the cost and time required for integration; policy support will ensure legal compliance and standardisation. The study also finds that by adopting these factors, local governments can foster efficient and speedy integration of administrative management and human resources. These findings provide practical guidelines for the effective application of digital technology, organisational design, and public policies that promote innovation and sustainable development in public administration. It is necessary to investigate the particular technological approaches and multi-faceted methods for improving organisational performance in various digital contexts.

Inefficient urban-rural resource allocation and reduced tuition benefits for preschool education: an example from a Chinese county

PurposeTaking urban-rural disparity into account, this research examines the current service provision of preschool education at the local level in China.Design/methodology/approachFollowing a qualitative design, the research is based on a case study on the preschool service provision in Luochuan County in China, with data collected from semi-structured interviews with grassroots officials and residents from the county’s rural and urban regions.FindingsThis research finds that preschool services are inefficiently delivered between the county’s rural and urban areas. While services are oversupplied in rural regions, the popular demand for urban kindergartens is inadequately addressed. Moreover, the tuition subsidy offered by the local government has drastically decreased in recent years.Research limitations/implicationsThis research is confined to a single-case study, so its findings are not necessarily applicable to all Chinese localities. Nevertheless, it proves that these problems in preschool service provision can be a result of the central authority’s tight control.Social implicationsGiven China’s rapid urbanization and fertility decline, this research argues that overinvestment in rural kindergartens can be a widespread phenomenon throughout China. It also suggests a decreasing popular demand for other public services, such as childcare, in Chinese rural regions. This research calls for special attention to the persistent regional discrepancy in preschool service standards and the welfare cuts after the revenue centralization reform.Originality/valueThis research contributes to a clearer picture of the current preschool service delivery by Chinese local governments, which remains largely underexplored by far. It also provides updates on the country’s long-existing urban-rural discrepancy in preschool services.

Service Motivation under Political Pressure

The county-township cadres in China have a pivotal role as intermediaries between the strong state apparatus and the general population, directly overseeing public services. In contrast to the conventional paradigms that take external political pressure to be paramount in shaping bureaucratic receptiveness, this study uses a bureaucratic subjectivity approach that amalgamates intrinsic service motivation with structuralized external pressures in the context of Chinese local government to provide a more systemic and nuanced explanation of the sources of Chinese cadres’ responsiveness. Data are from an original quota-sampling survey of local cadres in 10 cities in China. We find that service motivation, together with mass media and top-down political pressure, shapes county-township responsiveness at both individual and organizational levels, and that service motivation transfers top-down political pressure to organizations’ responsive activities.

IS CHINA REALLY A “POLLUTION HAVEN”: HOW FOREIGN DIRECT INVESTMENT SHAPE CARBON EMISSION IN CHINA? EVIDENCE FROM 265 CHINESE PREFECTURE-LEVEL CITIES

This paper explores the applicability of the well-known “Pollution Haven” hypothesis and “Pollution Halo” hypothesis at the city-level in contemporary China. The fixed effect model and the threshold effect model are employed to investigate the relationship between foreign direct investment (FDI) and carbon emission in 265 Chinese prefecture-level cites. Based on the entire sample, the results of fixed effect model support the applicability of “Pollution Haven” hypothesis, while the hypothesis is substantiated primarily in eastern and western China. In contrast, the central part of China does not conform to either hypothesis, suggesting that the emergence of a distinct “Pollution Haven Basin” within the country. Unlike the inverted “U-shaped” curve commonly posited in the existing literature, the threshold effect model unveils a “U-shaped” connection between FDI and carbon emission. Specifically, we find that the turning point is at around $52.93 million, which implies that FDI needs to surpass a certain threshold to actively drive carbon emission in the presence of a “Pollution Haven Engine”. Accordingly, in the context of more in-depth international trade and China’s carbon neutralization commitment, it would be wise for the Chinese local governments to control the FDI scale, and encourage FDI to tilt toward the clean sectors.

The implementation of Public-Private Partnership in China: A sustainable pathway?

The organizational forms of infrastructure in China are divided into two categories, the traditional Public Procurement Model (PUB) model and Public-Private Partnership(PPP) model. The main difference is the separation or binding of the construction and operation phases. A systematic understanding is needed of how Chinese local governments choose between these two models. In this paper, we take public capital congestion and local government objectives as the entry point to study the effects of both on PPP choice. Firstly, by constructing an endogenous economic growth model under the PPP model, and comparing it with the model under the PUB model, this paper initially explains how the rise in public capital congestion affects the choice of the PPP by growth-oriented local governments. Then the data from prefecture-level cities from 2009-2018 are utilized to conduct empirical tests. We find that urban economic growth pressures have a positive effect on the choice of PPP when the congestion of public capital increases. Furthermore, the implementation of PPP is indeed conducive to economic performance, and its core mechanism is to provide more infrastructure (like roads) rather than tax competition. The PPP model is more sustainable. We are the first to employ both modeling approach and the empirical research to address the implementation of Public-Private Partnership in China. And we have systematically analyzed the conditions and results of PPP selection by local governments. It formulates the Chinese PPP theory.

The impact of local government bonds on land-leasing behaviours and the economic consequences: evidence from the self-issuance reforms in China

ABSTRACT Under the 1995 Budget Law, land finance, rather than local government bonds (LGBs), played a critical role in bridging fiscal gaps for Chinese local governments. This paper examines the impact of the self-issuance (SI) reform of LGBs from 2011 on land leasing using county-level data from 2000 to 2019 combined with land parcel data and business registration databases of China. Findings reveal that, firstly, SI reforms initially reduce land leasing but increase it by 24.86% three years later, with a preference for commercial and residential land. Reforms also raise commercial and residential land leasing prices by 14.22% and do not compel lower prices for industrial land. Secondly, based on repayment obligations, the self-issuance and central-government-repayment (SICGR) mode alleviates fiscal pressure, favouring commercial and residential land leasing, while the self-issuance and self-repayment (SISR) pattern enhances fiscal sustainability and leads to more industrial land leasing. Thirdly, mechanism analysis suggests that SI reforms increase debt burden and decrease fiscal self-sufficiency, primarily through land tender, auction, and listing mechanisms, resulting in unbalanced regional development. This research highlights the need for sustainable development patterns under the New Budget Law of 2015, balancing fiscal revenues, the land market, and local government debts.

Improving sustainable performance of China's new energy industry through collaborative innovation network resilience

The sustainable development of the new energy industry is crucial and needs support from collaborative innovation networks (CINs). However, CINs may face hindrances or interruptions under multiple risk shocks, impeding their effectiveness in promoting sustainable performance (SP). Enhancing CIN resilience is essential for the normal operation of CINs and requires support from the innovation ecosystem. This study aims to improve CIN resilience by optimizing innovation ecological factors, thereby improving the SP of new energy industry. The study selects China's new energy industry as the empirical object. Firstly, the impacts of CIN resilience on SP are explored through regression analysis. Secondly, the impacts of nine driving factors proposed based on innovation ecosystem on CIN resilience were uncovered by the temporal exponential random graph model. Lastly, network simulation was utilized to study how to optimize CIN resilience through network edge addition strategies and identify key regional cooperations for enhancing CIN resilience more effectively. The results indicate that: (1) CIN resilience can improve SP, with adaptive capacity exerting the most promotional effect. (2) Innovation ecological factors dynamically and heterogeneously drive CIN resilience. Innovative market subjects and technical environments exhibit substantial positive impacts on CIN resilience. (3) Promoting innovation cooperations of intermediary bridge regions can optimize CIN resilience. This study offers practical strategies for Chinese local governments and other countries or regions to formulate effective industrial policies and provides valuable insights for new energy enterprises.

Measuring and Benchmarking Fiscal Health: A Study of Chinese Provincial Governments

ABSTRACT Understanding the fiscal health of local governments is crucial for sound fiscal decision-making processes and prudent fiscal management across the globe. To generate knowledge about fiscal health in an international context, this research establishes a four-dimensional framework to conceptualize and measure the fiscal health of Chinese local governments, considering China’s unique political and fiscal institutions. The study generates an aggregate fiscal health index and finds that its four components are strongly correlated with local socioeconomic conditions. With these measures, local government officials can conduct financial analysis, develop fiscal planning activities, and aid in designing and implementing fiscal resilience strategies.

Does world heritage site initiation promote tourism? A difference-in-difference approach

Extant studies have found that the inscription of World Heritage sites (WHS) has no or negative effect on tourism in China, which does not explain why Chinese local governments are eager to apply for WHS. This study employs the difference-in-difference approach and city-level data from China to assess the effect of WHS over a more extended period, starting from initiation instead of inscription. The results indicate that WHS initiation can promote tourism, while WHS inscription reduces tourism revenue. Furthermore, heterogeneity analysis reveals that WHS initiation has a more positive effect on domestic tourism revenue in the eastern region of China. In contrast, WHS inscription has a more negative effect on tourism revenue in the western region.