Fiscal policy and the development of green transportation infrastructure: the case of China's high-speed railways

Zoey Wong, Afei Chen, Chenrong Shen and Dailong Wu ()
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Zoey Wong: Nanjing University
Afei Chen: Nanjing University of Finance & Economics
Chenrong Shen: Nanjing University of Finance & Economics
Dailong Wu: Nanjing Normal University

Economic Change and Restructuring, 2022, vol. 55, issue 4, No 7, 2179-2213

Abstract: Abstract High-speed rail (HSR) has been highly valued as an accelerator of green economic growth. However, the difficulty in financing caused by the high investment demand and long construction cycle of high-speed rail is an ongoing dilemma facing the high-speed rail industry. Using data from Chinese cities from 2003 to 2018, this paper explores whether fiscal policy is conducive to solving financing problems for high-speed railway construction. At the same time, this paper investigates the economic and environmental benefits of high-speed rail construction investment for urban development. We find that fiscal policy helps reduce the financing cost of high-speed railway construction projects and attracts social capital, spurring investment in high-speed rail construction. When economic policy uncertainty rises, companies will choose more secure, "safe" investments to avoid potential risks, such as government-led high-speed rail construction projects, which has led to their further expansion. Regarding its economic effect, high-speed rail construction investment directly promotes urban productivity, investment scale, and industrial structure upgrades. Over the long term, investment in HSR construction helps curb urban pollutant emissions, thus contributing to urban eco-efficiency.

Keywords: Fiscal policy; High-speed rail; Economic policy uncertainty; Economic effects; Environmental effects (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10644-021-09381-1

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