"Political signaling drives China’s pilot emissions trading scheme with Chen Xiang, Assistant Professor, Shanghai Jiao Tong University."

China’s approach to environmental regulation relies heavily on campaign-style enforcement and blunt-force regulation. While considered effective in the short run, this approach is often inefficient and generates unintended regulatory outcomes in the longer run. At the same time, China continues to experiment with the use of market-based approaches that are theoretically more efficient and have the potential to facilitate sustained reductions in carbon emissions. Arguably the most high-profile example is the Guangdong Emissions Trading Scheme (ETS), which was launched in 2013 as a national pilot scheme. We construct a synthetic control of Guangdong and analyze 51,076 party-led newspaper reports to show that while the ETS reduced emissions in the short run, these reductions were systematically associated with political signaling. Our findings suggest that current market-based approaches in China may not be qualitatively different to more direct forms of environmental regulation.

Speaker bio: Chen Xiang is an Assistant Professor in the School of International and Public Affairs at Shanghai Jiao Tong University, and she is also a Fulbright Fellow at the Harvard-China Project on Energy, Economy and Environment at Harvard University. Her research explores the antinomies that emerge through economic and political modernization, such as development and environmentalism, nationalism and populism, and China’s foreign policies. Her recent works have been published in Environmental Science & Policy, Energy for Sustainable Development, Cambridge Review of International Affairs, and International Affairs. Email: chen.xiang@sjtu.edu.cn.