Local Governments In China Research Articles

Impacts of digital finance on energy efficiency: does environmental regulation matter?

The paper examines how digital finance affects energy efficiency in China using a dynamic panel model and data from 282 cities between 2011 and 2019. The study is based on the hypothesis which is related with digital finance, environmental regulation, and energy efficiency. The results indicate that: (1) Digital finance significantly improves energy efficiency, and this finding is consistent after several tests; (2) Digital finance has a positive effect on energy efficiency in non-resource-based cities, recession and regeneration resource-based cities, and old industrial base cities, but no significant effect on energy efficiency in growth and maturity resource-based cities and non-old industrial base cities; (3) Environmental regulation positively influences how digital finance affects energy efficiency; (4) The impact of digital finance on energy efficiency depends on the degree and tools of environmental regulation. This research offers valuable insights to local governments in China for promoting financial digitization and enhancing energy efficiency.

“Laboratory nationalism”: Policy innovation in China

The central government and local governments in China constitute “laboratory nationalism”, which is different from “laboratory federalism”. As a planner, the central government first organizes small-scale policy trials, then imitates the successful policies on a larger scale. To illustrate the process, we take the gradual regional opening as a typical case, then develop a two-stage “trial-extension” game model incorporating the central government and two local governments. Laboratory nationalism's domination depends on actions of the central government at two stages: (1) offering proper incentives to the eligible district at the beginning; (2) in the end unifying local policies to the one which has proven to be successful. We demonstrate that under certain conditions, laboratory nationalism can improve on decentralized outcome.

Does leadership gender representativeness improve policy outcomes? Evidence from local governments in China

AbstractNumerous studies have delved into the intricate dynamics of representative bureaucracy in public service provision, yet a significant gap exists in our understanding of the distinctions between top leaders and members of the top management team (TMT). Using the panel data of 317 subdistricts in Beijing, this research revealed that top female leaders have stronger influences on public service delivery than female TMT members. Top female leaders handle citizens' complaints better than their male counterparts, while the effect of TMT gender representation is nonsignificant. This research underscores the imperative need to differentiate between the representative roles of top leaders and TMT members, thereby revealing nuanced effects in the realm of gender representation.

Can Green Finance Reform and Innovation Pilot Zones Promote the Operational Efficiency of Commercial Banks? — Empirical Research Based on 40 Commercial Banks in China

The Chinese government is placing significant emphasis on green development. From 2017 to 2021, the central and local governments in China established 9 green finance reform and innovation pilot zones in 6 provinces to explore the pillars of China’s green finance system. Although these zones and related policies have been proven advantageous for innovative manufacturing enterprises and environmental quality, the impact on commercial banks, pivotal players in China’s green finance landscape, has been understudied. This paper employs the DEA-Malmquist and DID models to investigate the impact of pilot zones on the operational efficiency of commercial banks. The results indicate that the establishment of pilot zones significantly improves banks’ operational efficiency, and the mechanisms are reducing non-performing loan rates and increasing green credit balance. In addition, state-owned banks have benefited more. Further research shows that the improvement mainly comes from increased pure technical efficiency, due to better management practices and resource utilisation. These findings can be used to evaluate the impact of the government’s green finance policy on the operation of commercial banks.

Addressing Multitasking Problems through Promotion Incentives: An Empirical Study of Local Governments in China

This study builds a theoretical framework on how subnational governments use promotion schemes to motivate local bureaucrats to address conflicting tasks of economic development and environmental protection. We argue that subnational (province) governments can strategically allocate polluting industries to border areas to make neighbors bear the social cost of pollution and use promotion incentives to make their subordinates (city leaders) comply. Hence, when the central government imposes a stricter environmental regulation policy on provincial governments, border-city leaders obtain a higher probability of promotion. Based on a panel dataset of leaders’ career information and administrations across cities in China, we find an increase in promotion probability for border-city leaders compared with their non-border counterparts after 2011 when the environmental protection task became more important. A potential channel is that border-city leaders accept the migration of polluting industries as a signal of compliance. In addition, this effect is more prominent for newly appointed leaders who have stronger political motivations and rely more on their superiors.

Manpower, financial, material resources, and participation level in national fitness: a fuzzy-set QCA approach.

In the era of economic globalization, major public health events-such as the Ebola epidemic, the avian influenza epidemic, the "SARS" epidemic, and the COVID-19 pandemic-occur more frequently, severely endangering human life safety and health and making global public health governance a major survival issue of universal concern. Therefore, governments have included the improvement of national health in their sustainable development goals, and its important position in global and national health policies has become increasingly prominent. However, the most common non-medical intervention taken by the government is to encourage people to actively participate in physical fitness activities to prevent disease and improve health. Therefore, how to improve the level of participation in national fitness is not only a hot topic in the academic community, but also a work content that governments around the world attach great importance to. To reveal the complex interaction of the factors affecting the participation level in national fitness and obtain the linkage and adaptation mode of multiple conditions. Starting from the three elements of manpower, financial, material resources, combined with the characteristics of the organizational behavior of local governments in China, this study puts forward an integrated analysis framework to understand the difference of the participation level in national fitness in various provinces and regions. Fuzzy-set Qualitative Comparative Analysis (fsQCA) is used to carry out configuration analysis on the participation level in national fitness in 31 provinces and regions in China. First, no single necessary condition can explain the results, whether for high-or low-level national fitness participation. Second, the construction of social sports instructors, public financial support for mass sports, and the supply of sports venues are the core conditions for improving the participation level in national fitness. Third, high-level participation of national fitness is carried out in five ways in China's provinces. These findings enrich the literature on improving the participation level in national fitness, and provide useful practical enlightenment for the local governments to increase the participation level in national fitness.

A Machine Learning-Based Approach to Identifying Key Innovation Determinants for Industrial Firms: The Case of the Pharmaceutical Industry in China

With abundant resources consumed by innovation practices, it is of strategic importance for industrial firms to identify key determinants of innovation performance from both internal and external environments for better and effective innovation management. To this end, this article develops a new machine learning-based approach to examine a variety of factors influencing innovation performance. In particular, a two-process modeling approach is developed to build machine learning models efficiently for identifying key internal and external innovation factors. With extensive experiments using data collected from China's pharmaceutical industry, the approach identifies a set of key internal and external innovation factors and their best configurations in terms of two commonly used innovation performance measures. The findings enable pharmaceutical firms and local governments in China to manage innovation efforts and formulate management strategies for promoting industrial innovation. The article contributes to innovation management research by providing an objective and data-oriented approach for comprehensively exploring internal and external innovation factors and establishing their relationships with expected innovation performance. Although the approach is exemplified by China's pharmaceutical industry and the results cannot be generalized, it has general applicability to other industries or countries.

Wicked problems of early-COVID-19 response: A content analysis of public emergent norms

COVID-19 acted as a "Disease X", challenging governments around the world in early 2020. Rightly or wrongly, a local government in China handled the pandemic response with great uncertainty, triggering immediate consequences. While the world has entered the post-COVID era, it is still unknown how residents perceived the governmental responses in aligning policies to the public needs under such a great level of uncertainty. This study reevaluated the public's perception of the earliest Chinese government response to the COVID-19 pandemic using the interpretivist paradigm and content analysis. The qualitative and inductive research design used a snowball sampling method and collected 111 semi-structured questionnaire responses in February 2020. A framework of three themes, eight categories, and forty-five codes was developed from the findings, covering knowledge of the virus, information sources, information reliability, quarantine communication, quarantine support, needs during quarantine, improvement recommendations, and hopes and questions. Built from the lived experiences of the Chinese public during the first COVID-19 lockdowns, the posited framework encapsulated the public's perception of the government's response to this pandemic. To conclude, we drew three policy recommendations based on the three key themes to improve preparedness for future health crises and pandemics—disaster communication, integrated pandemic preparedness system, and hope and uncertainty. In particular, (1) a government-developed public information system can promote two-way communication and reduce information asymmetry; (2) an integrated system can better coordinate resource allocation; (3) the warning messages can correspond to the hope and positive feelings in the public norms.

Countercyclical central government transfers incentivize local government overborrowing: Theory and evidence

Local governments in China have strong incentives to overborrow, leading to unsustainable local debt. Recent research suggests that higher central government transfers serve as a key incentive for local governments to overborrow. This paper constructs a theoretical model and shows that it is the countercyclicality of central government transfers, that is, the negative correlation between transfers and local revenues, that act as the main incentive for local governments to overborrow. We test the model predictions using hand-collected provincial data on local government debt and budgets. The empirical evidence strongly supports the prediction that the negative correlation—not the magnitude—of central government transfers is the main driver of the incentive for local governments to borrow excessively. The countercyclical nature of central government transfers provides insurance against local government debt service, thereby increasing the incentive for local governments to borrow. The findings suggest the need to change the central government transfer policy framework.

Local Government Environmental Attention and Urban Land Green Use Efficiency in China: The Intermediary Role of Industrial Restructuring

Local governments in China have decision-making authority over urban land use, and their level of environmental attention influences the green use of urban land. However, the impact of local government environmental attention on urban land green use efficiency and its mechanisms remain unclear. This study utilizes panel data from 284 cities from 2003 to 2020 in China and employs fixed effects models and mediation analysis to investigate the pathways through which local government environmental attention affects urban land green use efficiency. The main results are as follows: (1) Through a series of significance tests, local government environmental attention has a significant positive influence on urban land green use efficiency in cities. (2) Further research suggests that both the quantity and quality of industrial structure upgrading act as intermediaries between local government environmental attention and urban land green use efficiency, while the rationalization of industrial structure plays a partial masking role rather than acting as an intermediary. (3) Furthermore, a regional heterogeneity analysis indicates that the impact of local government environmental attention on urban land green use efficiency is significant in the central region but not in the eastern and western regions. Based on these research findings, this study provides valuable policy insights aimed at contributing to green land use and sustainable development in Chinese cities.

Analysis of the Factors Influencing the Dependence of Local Governments on Land Finance in China

With the increasing debt accumulated by local governments, land finance has become an important issue worth paying attention to in the Chinas economy. Based on the political economy literature, this paper selects general public budget expenditure, regional GDP, per Capita GDP, urbanization rate of permanent people, and the development of the secondary industry as independent variables and the dependence on land finance of the local government as dependent variable. Panel data from 22 provincial local governments is collected for empirical research. The empirical results indicate that accelerating urbanization, general public budget expenditure have led to local governments obtaining extra-budgetary land fiscal revenue. The growth of regional GDP and the expansion of the secondary industry will bring revenue to the region, which will help reduce the dependence of local governments on land finance. The political economics research on land finance helps to understand the economic behavior of local governments in China and also contributes to understanding the issue of soft budget constraint.

Artificial-Intelligence-Enhanced Study on the Optimization of the Responsibility and Compensation Mechanism for Provincial Cultivated Land Retention from a Fairness Perspective

Research Objectives: Considering the complex challenges arising from urbanization, population growth, and the consequential strain on China’s cultivated land resources, we integrate insights from advanced artificial intelligence (AI) technology. The primary objective is to quantitatively assess the cultivated land-holding responsibility of local governments in China from a fairness perspective. Our aim is to integrate the cultivated land responsibility ownership amount into the compensation mechanism for cultivated land protection, thereby promoting fairness, cultivated land conservation, and sustainable agricultural development across Chinese provinces while ensuring efficient agricultural product distribution. Research Methodology: Beyond a traditional literature review and model analysis, we incorporated AI technology for data analysis and model optimization. Findings: ① The findings demonstrate a surplus in both food security and ecological security within cultivated land. ② In-depth analysis via AI revealed that the provinces with the largest surplus include Heilongjiang, Jilin, and Hubei. ③ With the precision provided by AI, we delineated the minimum value of the cultivated land responsibility ownership amount for each province. Eleven provinces met this criterion, primarily located in the northeast and central regions and including Yunnan in the west. ④ From a fairness perspective, coupled with AI insights, we established a compensation mechanism for cultivated land protection that is better suited to the Chinese context. Based on this mechanism, the national average compensation standard was calculated to be 26,900 CNY per hectare. The highest standards were observed in Shanghai, Beijing, and Jiangsu, while the lowest were in Shanxi, Heilongjiang, and Gansu.

Tax competition among local governments: Evidence from the spillovers of location-based tax incentives in China

This paper exploits the tax incentives in China's Great Western Development (GWD) Program to identify tax competition among local governments. The reform reduces the statutory corporate income tax rate in GWD regions. Using this exogenous tax reduction as a quasi-natural experiment and adopting a difference-in-differences approach, we find that the reform in GWD regions leads to a 1.6328 percentage point decline in the effective corporate income tax rate and a 0.658 percentage point decline in the macro tax burden in non-GWD counties adjacent to the policy boundary. The results suggest that there are strategic interactions as well as a race to the bottom among counties in their tax setting. The results are stable across a series of robustness tests such as excluding other mechanisms of tax rate interaction and excluding the impact of other incentive policies in the GWD Program. Combined with the tax reduction effect in border GWD counties, we find that the tax interaction coefficient for the effective corporate income tax rate and macro tax burden between GWD and non-GWD counties along the border are 0.8718 and 0.3553, respectively. This reflects the intense tax competition among local governments in China. In addition, we demonstrate that tax competition mainly exists between geographically adjacent counties, as no such spillover effects are observed in non-GWD counties far from the policy boundary.

Who benefits from the basic old-age insurance contribution subsidy policy for the disabled?

The aim of this paper is to track the whereabouts of basic old-age insurance (BOI) contribution subsidies. Little research has paid attention to the misalignment between the implementation objects of subsidy policies and the actual beneficiaries. In recent years, local governments in China have followed a contribution subsidy policy to help persons with disabilities (PWDs) with lower life expectancies. This study applied an actuarial model to calculate the leakage rate of the BOI contribution subsidy. The primary data are from the life tables of the entire population and PWDs in K province in China in 2015. It was found that, under different booking interest rates, 35.27%–61.26% of the contribution subsidy for PWDs in the individual account will be inherited by their heirs, and under different discount rates, 18.21%–68.74% in the pooling account will be enjoyed by non-disabled participants. The policy of BOI contribution subsidy for PWDs failed to account for the shorter average life expectancy and the lower average income of PWDs and would result in a welfare loss for PWDs. Therefore, it was suggested that it should be replaced by a non-contributory pension policy for PWDs.

The principle of rule of law in local government in the PRC: theory and practice

This article analyzes the theoretical and practical problems of the current legislation at the local level in China. Taking into account the principle of the rule of law, local legislation has become the most important aspect in strengthening the capacity of local self-government and stimulating local development, which causes local legislation to follow the same values and goals as municipal government. This article explains the main theories underlying the practice of local legislation in China, explores the underlying problems in the current practice of local legislation, studies how the principle of "rule of law" is combined with local resources in China, and suggests ways to develop local legislation and strengthen the rule of law. Based on the theory of socialist legislation with Chinese specifics and taking into account current trends and the material and legal resources of local government in China, the article argues that the way to implement the rule of law in local legislation and governance lies through the awareness by local legislatures of a reasonable position of power, the boundary between law and freedom, as well as the balance between rights and responsibilities. These three aspects are the core of research on the awareness of the value of the subject of the rule of law.

Developing indicators for promoting provincial-level ecological economics in China

The development of the eco-economy has become an important way to promote sustainable development and address climate change worldwide. Implementing eco-economic developmental policy globally or locally requires establishing precise indicators. Currently, there are many studies on eco-economy indicators at the academic level, but the eco-economy indicators researched at the academic level are difficult to be implemented and applied by local governments in China, and there is a knowledge gap between the political sector and the academic sector in the process of cooperation. This mainly stems from the lack of whole-process research and analysis that combines government practice and academic research. We attempt to analyze the differences in the understanding of eco-economic indicators between academics and government decision-makers through the study of the establishment process of China's local eco-economic indicator system. We try to find out the reasons for the knowledge gap between academics and government decision-makers, and to build a knowledge bridge between government practice and academic research. At the same time, China, as the largest developing country and an emerging country in the construction of ecological civilization, is worth studying and learning from its experience in the construction of eco-economic indicators. Therefore, we systematically study the connotation of China's eco-economy and the development process of the indicators. And we combine with the practical experience, describe the method and specific process of constructing eco-economy indicators at the provincial scale of the Chinese government. Meanwhile, we put forward the limitations of the construction of the eco-economy indicator system in Liaoning Province. In addition, we analyze in detail the characteristics and attributes of the ecological economy indicators in Liaoning Province, as well as the relationship of these indicators to the implementation of national strategies and to the SDGs. The discipline contributions and scientific and technological concerns of the indicator system's creation are reviewed, and additional improvement ideas are presented. It is expected that the practice of eco-economic indicators in China will further promote eco-economy development and provide methodological reference for countries to measure the level of eco-economic development.

Local government debt and labor income share: Evidence from China.

This study employs a CES production function to construct a theoretical model of labor income share and uses a two-way fixed effects model to test the causal effects of local government debt (LGD) on the labor income share of enterprises. Local government debt governance policies are utilized as exogenous shocks, and a DID (Difference-in-Differences) model is applied for endogeneity testing. The results have passed a series of robustness checks. The findings suggest that LGD decreases the share of firms' labor income. The mechanism analysis suggests that LGD lowers the labor remuneration of residents, the employment of labor in enterprises, and the size of bank loans mainly; while raising the cost of using funds in enterprises. Moreover, this negative effect is more apparent in non-state-owned enterprises, small and medium-sized enterprises, and enterprises with high financing constraints. This study presents new evidence on how the labor income share of enterprises is affected from the perspective by local governments in China. It has important implications for further deepening local government debt governance and achieving common prosperity.

Research on digital transformation strategy of the energy industry based on differential game under the dual-carbon background in China

Digital transformation of the energy industry is at the vanguard of promoting green and low-carbon development of energy, and the transformation and upgrading of the energy industry is a critical path to achieve the goal of “dual carbon.” The study takes energy enterprises, digital technology providers, and local governments in China as the research objects, then by constructing a three-party dynamic differential game model, four scenarios are considered respectively. The optimal digitization effort, digitization level, carbon emission reduction expectations, and optimal benefits of each subject are studied. The results show that: (1) Government subsidies function as an effective regulating mechanism, helping regulate the profit distribution of energy enterprises. With government subsidies, cost-sharing contracts can improve the profits of energy enterprises and digital service providers and enhance industry digitization and carbon emission reduction to some extent. (2) When there are government subsidies, the optimal digitalization efforts of energy enterprises and the optimal subsidy coefficient of government under the three decisions are independent of time. The extent to which subsidies improve system members' income is correlated to its game structure and status. (3) In the centralized decision-making state, digitalization level, product emission reduction, and total system profit are higher than in the decentralized decision-making state, which can better help the overall revenue system composed of energy enterprises, digital service providers, and local governments to achieve economic and environmental optimization at the same time and reach the Pareto optimal state. (4) With government subsidies and after the introduction of contracts, when certain conditions are met, the followers' optimal digital effort level, product emission reduction, digitization level, demand and profits of each member are all improved except for the leader's optimal effort level, Pareto improvement of profits of all participating members in the system is realized.

Government land control approach, industrial agglomeration, and urban air quality: Analysis based on spatial spillovers and threshold effects

Local government intervention in industrial land concessions has contributed significantly to the country's miraculous growth during the past four decades, but there are concerns about its environmental impact. Assessing the model's impact on the Air Quality Index (AQI) is critical for China as it focuses, now, on sustainable development. We examine the spatiotemporal effects and pathways of land use regulation by local governments in China on air quality index. The data used are real-time air quality data and land transaction micro data of 282 cities from 2015 to 2020. The results demonstrate that local government use controls have a favorable impact on the AQI in the city and its surrounding areas. Land intervention attracted capital from low-tech and high-polluting industries to their more aggressive locations, triggering “bottom-up competition” in the industrial structure through the industrial aggregation effect. The study also found structural breakpoints in the model's industrial agglomeration effect. There are two structural breakpoints in the national region; the model's impact on AQI increases significantly after exceeding each structural breakpoint. At the sub-regional level, there are two structural breakpoints in the industrial agglomeration effect of the eastern and western cities; both weaken after exceeding the second structural breakpoint. There is one structural breakpoint in the central cities; after exceeding it, the model's impact on AQI increases.

Explaining the Green Development Behavior of Local Governments for Sustainable Development: Evidence from China.

Although researchers have examined organizational sustainability practices, a specific interpretation of local government green development practices remains for supplemental analysis. This study conducted an empirical survey of 53 local officials from departments related to green development to understand the key processes and practices of green development behavior of local governments in China. The key findings indicate that the main stakeholders involved in the green development practices of Chinese local governments consist of enterprises and residents. In part, local government green development practices emphasize the greening of enterprises, especially in the step of process environmental regulation. The new institutionalism theory and the organizational process research provide dependable insights into green development behaviors. Our findings further shed light on the process of cross-sectoral cooperation across local government departments in green development, contributing to local multi-sectoral interactions for regional green development.