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Chinese Characteristics of ESG Under Market Competition and Globalisation

Author

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  • Ruohan Wu
  • Zheng Jiang
  • Huimin Shi

Abstract

We empirically examine how market competitiveness, which is subject to the influences of globalisation, affects Chinese firms' ESG (environmental, social and governance) performance. We acquire detailed information on A‐share listed Chinese firms between 2011 and 2020 and use foreign tariff shocks as instrumental variables of market competitiveness to control for endogeneity. We find that a higher market concentration (i.e., a lower level of market competition) significantly improves firms' ESG ratings. This finding remains robust under various instrumental variables of globalisation influences, various measurements of market competitiveness, various measurements of ESG and various empirical methods. Our mechanism analysis further reveals that market concentration takes positive effects primarily on state‐owned firms' ESG, especially their corporate governance. We attribute this finding to the Chinese characteristics of economy, where government power‐ and state‐owned firms play crucial roles. By studying determinants of Chinese firms' ESG performance by their ownership structures, we fill an important literature gap and provide a better understanding of the Chinese economy. JEL Classification: L22, F18, F43, Q56

Suggested Citation

  • Ruohan Wu & Zheng Jiang & Huimin Shi, 2025. "Chinese Characteristics of ESG Under Market Competition and Globalisation," The World Economy, Wiley Blackwell, vol. 48(4), pages 779-800, April.
    • Handle: RePEc:bla:worlde:v:48:y:2025:i:4:p:779-800
    DOI: 10.1111/twec.13672
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    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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