Monitoring serves as a crucial governance mechanism within a decentralized system, but its effectiveness depends on the scheme design. This paper investigates the effect of an in-between monitoring system on the compliance of local governments. Specifically, the national land inspection in China introduces local bureaus at a few locations tasked with routine inspections in local and adjacent regions. The routine inspection significantly increases compliance despite some signs of decay over time. Specifically, it reduces the proportions of new construction land and land for central-restricted industries, and increases the proportions of land for subsidized housing and transparency in land transfer. The effectiveness of inspection hinges on the trade-off between local capture and information accessibility. This paper contributes to the literature by highlighting the scheme design of monitoring in enhancing the compliance of local governments.

This paper examines engine-specific tax programs that are widely used in developing countries to limit car emissions. Using China's tax abatement program for small vehicles in 2015, we find significant price and sales responses for both small and large vehicles, indicating strong competition spillovers. The quantification model shows that an increase in car ownership generates more car emissions than the reduction resulting from the relocation from large to small vehicles. Welfare analysis further shows that the reduced government tax revenue and increased car emissions significantly outweigh the increased household welfare and firm profits, rendering the engine-specific tax program socially unbeneficial.

China’s 2026 Provisions on livestream e-commerce food safety vest digital platforms with core regulatory functions that are functionally equivalent to those of administrative agencies. These functions include licensing, inspection, standard-setting, and sanctioning. Platforms now screen vendor credentials, deploy algorithmic surveillance, and impose sanctions up to permanent blacklisting. These powers mirror core administrative functions, yet Chinese law classifies them as private “corporate responsibility.” This classification displaces core administrative law constraints on platform power. Duties of reason-giving, procedural fairness, and the availability of judicial review are thereby excluded. This article exposes the accountability vacuum that results. Comparison with the EU Digital Services Act demonstrates that procedural safeguards need not compromise regulatory efficiency. This article proposes four interventions that establish minimum procedural safeguards for platform-mediated governance, including mandatory internal review, a duty to provide reasons, bridging mechanisms for dispute resolution, and technological due process embedded in platform architecture.

Abstract Court capture in developing countries is pervasive, yet its economic effects remain underexplored. We study a Chinese reform that transferred financial and personnel authority over local courts from local to provincial governments. Exploiting the staggered roll-out, we find a 7.3% decline in local defendants’ win rates against non-local plaintiffs, alongside improved judicial quality. The reform encouraged smaller non-local firms to litigate and attracted non-local investment, potentially raising GDP by 1.9%. Yet favoritism toward politically connected firms and inter-provincial protectionism remain, and centralization itself promotes less qualified judges— revealing both its promise and limits.

Why did China’s export boom not boost its financial development? This paper offers a novel explanation from a regional perspective. We leverage variations in industries’ external finance dependence (EFD) and decompose a region’s export shock into two additive subcomponents: high-EFD and low-EFD export shocks. Our findings reveal that the export expansion of high-EFD industries significantly enhances financial development, while that of low-EFD industries diminishes it. Therefore, the lack of response in China’s financial development to its export expansion stems from the prevalence of regions specializing in low-EFD industries. Our study highlights the importance of accounting for industry-specific variations in external finance dependence when analyzing the demand effects of regional export expansion.

The rise of state-guided market economy is a striking development in the world economy, and China is one leading example. Under China's state-guided market economy, non-state-controlled corporations typically face discrimination in business operations, and have adopted the strategy of making donations to government-favored causes to capture the government, win governments’ trust and retrieve a level playing field. With an event study of corporate donations to Wenchuan earthquake relief campaign in 2008, we detect strong and positive market reactions to non-state-controlled donor firms, especially those ex-ante low-efficiency firms operating in regions with a high degree of government intervention, where the ownership-based discrimination is particularly severe and donations can be especially effective in redressing discriminatory treatments. Donor firms also display improvements in long-term performance indicators, which suggests an expansion of business opportunities. We also show that this strategy is fundamentally different from corruption (bribing bureaucrats), and also argue that it differs from corporate political or campaign contributions in mature democracies.

The effectiveness of environmental policies is often compromised by weak enforcement due to conflicts between local and national interests. We examine a novel institutional reform in China that centralizes the management authority of grassroots environmental bureaus to address the issue of local capture. By analyzing the staggered roll-out of this reform, we find that the Air Quality Index significantly decreased by 25.1%. We attribute this improvement to a reduction in the capture of front-line environmental regulators by local interest groups, alignment of interests between local regulators and their upper-level administrators, and increased efforts for environmental protection by local governments in a more independent and impartial regulatory environment. These results highlight the effectiveness of distributing management authority to different administrative levels, as it reshapes the incentives for local environmental regulators, strengthens enforcement efficiency, and facilitates the achievement of policy objectives.

Kinked policies change marginal incentives at a threshold, and agents respond by adjusting the assignment variable that determines their treatment. The bunching literature uses this response to estimate the elasticity of the assignment variable; policymakers often care about effects on other outcomes. We develop a framework for estimating causal effects of kinked policies on outcomes beyond the assignment variable when agents can fully manipulate it. Average effects are defined for two affected populations: bunchers, who locate at the kink, and shifters, who reduce their assignment values but remain above the threshold; shifter effects compare equal-mass intervals and require only rank invariance. Because a single kink identifies neither the counterfactual assignment density nor the counterfactual outcome function, identification is design-assisted: placebo groups and moving thresholds discipline the local shape of both objects, the focal group's unaffected observations pin down level and slope differences, and the restrictions are testable. Applying the framework to a kinked coinsurance schedule in China's medical insurance, we find that the loss of reimbursement above the annual cap sharply reduces outpatient visits, raises cost per visit, and shifts the composition of care toward hospitals – effects that are invisible in a density-only bunching analysis.

Although air quality deteriorates every year and millions of lives are put at risk, the determinants of individual attitudes toward environmental pollution remain obscure. We propose a hypothesis whereby the current day’s air quality affects attitudes toward environmental pollution. In the first study, we examine risk perception in a representative sample. We find that individuals who respond to the survey on a more polluted day perceive greater risk specific to environmental pollution, but not to other domains of risk. In the second study, we conduct a field experiment to solicit donations to a pollution prevention charity and a food support charity. We find that people donate more to the pollution prevention charity on more polluted days than less polluted days, whereas daily pollution has no effect on their donations to the food support charity. Overall, these results support the effect of daily air quality on attitudes toward environmental pollution and highlight the importance of public awareness of environmental concerns.

China's manufacturing industries were rather scattered geographically, largely due to the nonmarket forces within its economy. This paper, employing a difference-in-difference estimation framework, finds that after China's accession to WTO in 2001, trade liberalisation, that is, import tariff cuts, significantly contributes to the increase in the geographical agglomeration of China's manufacturing industries in the 2000s. This underlying mechanism is well illustrated in a new economic geography model in which trade liberalisation weakens 'centrifugal' forces and agglomerates the manufacturing industries. The result passes a battery of robustness checks and is supported by further explorations which find trade liberalisation increases import competition, reduces local protectionism and improves the efficiency of resource allocation. This study provides evidence contrary to the views that protectionist policy is responsible for geographic concentration and that trade liberalisation should lead to a more even distribution of industries. Furthermore, this paper provides another explanation for China's increasing industrial agglomeration and another dimension (i.e., the spatial dimension) via which trade liberalisation affects the country.

This paper identifies productivity gains from trade by studying the manipulation behavior of firms in response to regulatory policies on international trade in China. Bunching estimates show that participation in international trade increases firm productivity. The productivity gains increase over time, indicating dynamic learning from trading. Further exploration shows no effects on R&D investment, product rationalization and markup. Young firms and nonstate-owned firms (non-SOEs) gain more from participating in trade. Workers share productivity gains through increased wages but not from increased employment.

We analyse the effects of exposure to industrial robots on labour market adjustments, exploring longitudinal household data from China. We find that a one-standard-deviation increase in robot exposure led to a decline in labour force participation (-1%), employment (-7%) and hourly earnings (-8%) of Chinese workers. At the same time, among those who kept working, robot exposure increased the number of hours worked by 8%. These effects were concentrated among the less educated and larger among male, prime-age and older workers. We also find that more exposed workers increased their participation in technical training and were significantly more likely to retire earlier.

The worldwide trend of decreasing corporate tax in recent years has contributed to an increase in global carbon emissions, but implementing a global minimum tax rate of 15% could partially mitigate this impact. Policymakers should coordinate corporate tax policies with climate regulations.

The Republican Party has been the party most supportive of free trade in US politics for half a century. Donald Trump, the 45th US president, held a different stance from his party on free trade. We assess how Trump's China tariffs in mid-2018 affected the performance of his party in its midterm House elections later that year. We construct a measure of each county's exposure to Trump's China tariffs and merge that with the Republican share of votes in the county. We find that the counties heavily exposed to the tariffs were more supportive of their Republican House candidates.

Information and incentives are pillars of political accountability. We examine their effectiveness in achieving governance under China’s new ambient air quality standards. By exploiting the sequential introduction of pollution information disclosure and environmental performance evaluation, we show that transparency alone is insufficient to induce public monitoring or government responsiveness. But when information provision is combined with performance incentives, local bureaucrats take actions to reduce pollution. The findings suggest that in a top-down hierarchy, when superiors receive accurate environmental information and administer rewards or sanctions based on that information, local governments face greater accountability pressure and respond by improving environmental performance.

Many countries have cut their corporate tax rates in the past decades to attract foreign investment. To prevent this, a global minimum tax policy was approved by OECD countries in 2021. Global changes in corporate tax rates could reshape production and investment networks while impacting welfare and global emission patterns. Here we develop a theoretical multi-country multi-industry general equilibrium model and show that global corporate tax competition during 2005-2016 would increase global carbon emissions and shift more emissions to developing economies. Implementing a global minimum tax rate of 15% would reduce global carbon emissions and effectively decrease the developing economies' emissions. The results highlight that corporate tax policies should be coordinated with climate regulations. Countries use corporate tax cuts to attract foreign investment, which reshapes patterns of global production. This research shows that such competition will lead to higher carbon emissions and shift them to developing countries, while a global minimum tax could help alleviate these problems.

This study analyzes the effects of housing policies on child development. By exploiting the policy-induced discontinuity in house size in China, we find that favorable housing policies significantly reduce children’s cognitive skills, lessen their beliefs in an internal locus of control, and decrease their self-esteem but have little impact on their physical health or depression symptoms. The heterogeneous analyses show that children at a critical stage of skill formation, girls and children with longer exposure respond more strongly to housing policies. Furthermore, our mechanism decomposition shows that parenting skills play a large role in the effect of housing wealth on child development.

While China was reducing tariffs as part of the WTO accession process, it was also effectively restricting exports in some sectors by reducing the rebates of the value added tax (VAT) for exporters. We use a multi-country multi-sector Ricardian model to examine the extent to which these de facto export tax changes have benefited China and nullified the benefits to the rest of the world of China's trade liberalization. We show that trade liberalization benefited China's trading partners both through an improvement in their terms of trade and through a reallocation of resources from protected imported sectors to exportable sectors. We find that the partial rebate policy of VAT on exports provided a small effect overall on the welfare of China and its trading partners, although some countries lost as much as 2/3 of their gains from China's trade liberalization based on tariffs alone. By solving for China's optimal export taxes, we demonstrate that while certain sectors experienced a movement towards the optimal level of export taxes, others deviated from it. This differential adjustment contributed to the limited welfare effect on China. Interestingly, our results indicate that the export tax policies favored downstream sectors within China.