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Is China's carbon neutrality commitment truly credible? Evidence from a natural experiment

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  • Gao, Wen
  • Wang, Maobin
  • Ye, Tao

Abstract

The credibility of China's carbon neutrality commitment is an interesting and controversial topic. We investigate this issue using an exogenous policy experiment in 2021, in which the Chinese government surprisingly accelerated the pace of action to meet its pledge. We find that domestic investors perceive China's carbon emission commitment as credible by responding sharply to the possible enhanced energy control policies in China due to its pledge. Our evidence also suggests that investors’ concerns regarding escalating policies drive their reactions. Our evidence contributes to the discussion on perceived credibility and investor reactions to policy announcements.

Suggested Citation

  • Gao, Wen & Wang, Maobin & Ye, Tao, 2022. "Is China's carbon neutrality commitment truly credible? Evidence from a natural experiment," Finance Research Letters, Elsevier, vol. 50(C).
    • Handle: RePEc:eee:finlet:v:50:y:2022:i:c:s154461232200469x
    DOI: 10.1016/j.frl.2022.103284
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    References listed on IDEAS

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    3. Shahbaz, Muhammad & Nasir, Muhammad Ali & Hille, Erik & Mahalik, Mantu Kumar, 2020. "UK's net-zero carbon emissions target: Investigating the potential role of economic growth, financial development, and R&D expenditures based on historical data (1870–2017)," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    4. Shahbaz, Muhammad & Kablan, Sandrine & Hammoudeh, Shawkat & Nasir, Muhammad Ali & Kontoleon, Andreas, 2020. "Environmental Implications of Increased US Oil Production and Liberal Growth Agenda in Post -Paris Agreement Era," MPRA Paper 99277, University Library of Munich, Germany, revised 19 Mar 2020.
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    Cited by:

    1. Sadiq, Muhammad & Paramaiah, Ch & joseph, Robinson & Dong, Ziguang & Nawaz, Muhammad Atif & Shukurullaevich, Nizomjon Khajimuratov, 2024. "Role of fintech, green finance, and natural resource rents in sustainable climate change in China. Mediating role of environmental regulations and government interventions in the pre-post COVID eras," Resources Policy, Elsevier, vol. 88(C).
    2. Xu, Jie & Chen, Fu & Zhang, Weiwei & Liu, Yiting & Li, Tingting, 2023. "Analysis of the carbon emission reduction effect of Fintech and the transmission channel of green finance," Finance Research Letters, Elsevier, vol. 56(C).

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