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

Wen Gao, Maobin Wang and Tao Ye

Finance Research Letters, 2022, vol. 50, issue C

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.

Keywords: Carbon emission; Carbon neutrality; Energy consumption dual control; Event study; Bond market; China (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:50:y:2022:i:c:s154461232200469x

DOI: 10.1016/j.frl.2022.103284

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