This paper uses year-to-year fluctuations in temperature within counties to identify its effects on economic outcomes of Chinese manufacturing firms. We find four primary results. First, profit exhibits nonlinear responses to temperature. Profit decreases with higher summer temperatures and increases with higher winter temperatures. With temperature bins as temperature variables, profit increases with temperature up to 12-15°C, and then declines at higher temperatures. Second, higher temperatures have wide-ranging effects – raising labor costs, hurting innovation activity, and reducing industrial output by decreasing TFP, investment and capital stock. Third, these temperature effects differ across regions, ownership types and industries. Lastly, if no additional adaptation is undertaken, the total profit of Chinese manufacturing firms is projected to decline annually by 2.5-9.2% during the mid-21st century, equivalent to a loss of CNY 29.5-108.6 billion in 2007 values.
Temperature and Economic Performance of Chinese Manufacturing Firms
Working Paper by Xiaoguang Chen and Lu Yang — Feb. 21, 2018Download
Working Paper — Jan 14, 2020
China’s Unconventional Nationwide CO₂ Emissions Trading System: The Wide-Ranging Impacts of an Implicit Output Subsidy
This paper assesses the overall costs and distributional impacts of China’s planned nationwide emissions trading system for CO2 emissions reductions, a system that will differ from cap and trade and become the largest CO2 trading system in the world.
Working Paper — Jun 7, 2019
Building Subway Systems and Improving Air Quality in China: New Evidence from Multiple Chinese Cities
Partly to reduce air quality problems, China has invested heavily in urban subway systems. This paper provides the first comprehensive estimates of the effects of these investments on urban air quality, finding substantial air quality improvements.
Media Highlight — Jan 10, 2019