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Using data on the turnover of provincial Party secretary and interregional capital flows in China, this paper investigates the impact of officials' turnover on capital flows. We find that there are fewer capitals inflowing into the province during the year with officials' turnover, and it persists after considering selection bias and multiple robustness checks. When the outgoing officials have longer tenures or are not promoted and the new officials are non-native-born, the effect is larger. The impact of officials' turnover is more pronounced in provinces with lower investor protection, lower corruption level or more non-state economy. Finally, officials' turnover can decrease capital formation through reducing capital flows. [ABSTRACT FROM AUTHOR]

We use a sample of Chinese firms to examine the impact of social trust, as an informal institution, on firm financing violations. Our findings suggest that when a firm is located in a region with high social trust, it commits fewer financing violations than those committed by firms in a region of low social trust. The results are robust for alternative measures of financing violations (fraudulent activities when issuing new shares, changing the use of new funds to uses other than the stipulated purposes, or illegally using third‐party loan guarantees), social trust, and after using instrumental variables estimation to account for endogeneity. Additional analysis suggests that the impact of social trust on restraining financing violations is more pronounced for firms having lower interest costs, facing low industry competition, located in high marketisation regions, and having good internal control. The findings show that the impact of social trust on financing violations is moderated by the economic reality of the firm (interest costs and competition), the formal institutional environment (level of marketisation), and the internal governance of a firm (internal control). [ABSTRACT FROM AUTHOR]

Building upon recent research into the underestimation of China’s official final consumption expenditure, this paper investigates the quality of China’s investment data. We strictly follow the official method to estimate the annual gross fixed capital formation (GFCF) expenditure from 2004 to 2012, and the resulting figures are significantly different from the official statistics. This implies that the ‘total investment in fixed assets’ data, which are the primary source for the estimation of GFCF, grossly exaggerate actual investments, and that the official GFCF figures are not, strictly speaking, independently estimated, as they are purported to be. We deduce that the official gross capital formation figure is more or less a residual item obtained by subtracting final consumption and net exports from the official GDP figure that is calculated based on the production-cum-income approach. As a result, the underestimation of China’s consumption expenditure automatically translates into overestimation of investment expenditure. We conclude that China’s official consumption and investment statistics cannot be trusted as the basis for policy discussions and academic research. [ABSTRACT FROM PUBLISHER]

Studies of the effects of foreign direct investment (FDI) in the developing countries have reported many conflicting results. In this study, we test the effects of inward FDI on China's domestic capital formation, exports, imports, and GDP growth. To that end, we estimated four econometric equations using a data set covering the 1980-1999 period. A key finding of our research is that it was in the 1990s that inward FDI began to exert a significant effect in the Chinese economy. Our regression results show that the inflow of FDI has stimulated domestic investment in China. The growing presence of FDI appears to have enhanced the investment efficiency in the Chinese economy. Inward FDI is also found to have significantly increased China's exports and imports. The policy implications of our main findings are discussed. Several methodological issues pertaining to FDI research in China are also discussed. [ABSTRACT FROM AUTHOR]

Technological progress greatly contributes to the promotion of carbon productivity (CP). This study aims to identify an appropriate mode of technological progress that increases CP. A data envelopment analysis-based method was used to investigate the impacts of four forms of technological progress under two classifications of CP: the progress of neutral technology (NT) and capital-embodied technology (CET) under a technological source and the progress of energy technology (ET) and carbon technology (CT) under an abatement process. We applied dynamic panel data models to deeply analyze the different impacts of the four forms of technological progress on the CPs of Chinese manufacturing industries from 1995 to 2015. Results show that (1) a change in ET contributes more to the promotion of CP than a change in CT; (2) a change in CET promotes CP more than a change in NT; and (3) the indirect effect of a change in CET on CP through a change in ET and the indirect effect of a change in NT on CP through a change in CT are advantageous. These findings provide important policy implications in promoting technological progress and improving Chinese MIs' CPs. Significant policy measures based on theoretical and empirical conclusions are proposed. • Technological progresses promote China's MIs' carbon productivity (CP). • Energy technological change has a positive greater role on CP. • Capital bodied technological change has a positive greater role on CP. • Indirect effect of capital embodied technological change on CP is advantageous. • Indirect effect of neutral technological change on CP is advantageous. [ABSTRACT FROM AUTHOR]