Abstract
China's fast economic growth is associated with significant energy and environmental challenges. This thesis explores these challenges from the political perspective, with a focus on the rent-seeking, anti-corruption campaign, as well as the formal and informal government-business relationship.The second chapter exams the effects of political connection on the overinvestment issue across Chinese energy firms. The results shows that the overinvestment of an energy firm is positively affected by corporate political connection. Meanwhile, this invisible relationship can act as a "helping hand" to enable energy firms to obtain more government support to conduct investment and play as a "grabbing hand" to enforce politically connected energy firms overinvest heavily for the promotion benefit of local politicians.
Chapter three focuses on the impact of Xi's anti-corruption campaign on the Chinese energy industry. The results conclude the significant campaign impacts on corporate performance in the energy sectors. Since the inception of the campaign, energy firms have quickly lost their advantages in excess to higher bank credits and preferential taxes through their strong political connections. The increasing political pressure has dis-incentivized firms to participate in non-productive activities, including formal philanthropy donation and informal bribery behavior. As a result, energy firms have exhibited higher investment efficiency, productivity, and financial output after the campaign.
Chapter four analyses environmental pollution problems by focusing on the informal bribery activities between firms and local politicians. After constructing a theoretical model with uncertainty on pollution-induced catastrophes, there exists a threshold level of pollution triggering a reduction in bribery. The empirical results show that polluting firms' bribery payments can successfully persuade local regulators to make non-environmental policies. However, severe pollution exceeding the threshold can significantly change the regulator's objective, leading him to refuse bribery from the firms.
Chapter five investigates how the government customer induces its supply firms to engage in more environmental responsibility. the government customer plays a positive and significant impact on promoting CER at the firm level. The magnitude of the effect varies significantly across regions and industries, being attributable to the differentiated environmental attitudes of local authorities and the relative bargaining power. This research findings suggest that governments in a region with polluting firms can use the "carrot" of contracts to make the firms clean up rather than the "stick" of penalties that would drive them away, thus avoiding relocation of the polluting industries.
| Date of Award | 14 May 2021 |
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| Original language | English |
| Awarding Institution |
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| Supervisor | Lin ZHANG (Supervisor) |