Since the commencement of 18th National Congress of the Communist Party of China, the country has undergone a gradual transformation of economic structure and accelerated the market-oriented reform of the financial system. This has deepened the integration of finance and the real economy, making financial stability an integral component of macroeconomic stability. However, as economic structural reforms progress, some issues from the early stages of rapid development have emerged, making potential economic and financial risks non-negligible. In response to this, the 19th National Congress of the Communist Party outlined a strategic deployment to establish a “two-pillar regulatory framework” of monetary policy and macro-prudential policy. The aim is to ensure the bottom line against the occurrence of systemic financial risks through the coordinated implementation of the policies under the “two-pillar” regulatory framework. Within this framework, how should the central bank utilize monetary policy and macro-prudential policy to mitigate the economic and financial volatility caused by external financial shocks？
Concurrently, the external environment for China's economic development has grown more complex. China has not only continuously achieved new breakthroughs in economic openness but has also made significant progress in financial openness by simultaneously promoting the financial industry's internationalization, improving the formation mechanism of the RMB exchange rate, and decreasing capital controls. From an economic perspective, at a higher level of openness, domestic economy and financial markets are more closely connected with the world. As more foreign agents participate in domestic economic and financial activities, mutual influence and linkages between domestic and international macro economy and finance intensify. The spillover effects of policies become more evident, and the comprehensive regulation of macro economy and financial system becomes more intricate. In this context, a pertinent question is how economic and financial openness impact the policy effectiveness of the central bank's macroeconomic regulation.
In an attempt to address the aforementioned questions, this study, based on the model of Funke and Paetz (2013), introduces an incomplete open financial market and a banking sector subject to foreign exchange control, providing a theoretical framework for analyzing the transmission of exogenous shocks and the policy responses of the central bank under open conditions. By calibrating and estimating the model parameters using actual economic data from China over the period of 2014Q1 to 2022Q4, we examine the effects of different combinations of policy tools within the “two-pillar” framework. The findings suggest that, considering China's current levels of economic and financial openness, the central bank can better balance the goals of economic and financial stability and reduce policy loss levels by judiciously combining an expanded monetary policy that incorporates financial stability objectives, dynamic Loan-to-Value (LTV) regulation, and dynamic capital adequacy ratio requirements. However, the specific policy combinations and corresponding target adjustments need to be determined based on the nature of exogenous shocks. For instance, in the case of a depositor housing preference shock, a combination of an expanded monetary policy targeting loan volume, along with the other two macro-prudential policy tools, is deemed appropriate. In the context of a foreign house price shock, a traditional monetary policy combined with the other two macro-prudential policy tools is a relatively optimal policy arrangement. Further analysis reveals that changes in economic and financial openness affect the effects of the optimal policy combinations on economic and financial stability to varying degrees. Therefore, the central bank needs to consider the actual status of economic and financial openness when implementing the “two-pillar” policy regulation.
Based on the previously stated conclusions, we propose three policy recommendations: First, given the importance of the real estate industry in the Chinese economy and the complexity of related issues under open conditions, policymakers should comprehensively utilize monetary policy and macro-prudential policy for regulation. Currently, a policy combination of an expanded monetary policy incorporating financial stability goals, dynamic LTV regulation, and dynamic capital adequacy ratio requirements could more effectively achieve economic and financial stability objectives. Second, in the regulation, policymakers need to judiciously select the target and intensity of pertinent policies based on the specific nature of exogenous shocks to mitigate policy losses resulting from conflicts between policies. Third, as high-level opening advances, and as economic and financial openness undergo changes, potential connections between macroeconomic and financial variables will evolve. This necessitates policymakers to closely monitor economic and financial dynamics and promptly update the policy toolkit, flexibly employing diverse macroeconomic policies to further enhance their adjustment capability over the overall economic and financial conditions.

In the wake of a major unforeseen public event, there have been sustained and severe impacts on both supply and demand, with the 2020 COVID-19 outbreak serving as a quintessential example of such a phenomenon. This event prompted widespread adoption of social distancing and home isolation measures across nations, leading to rapid and substantial shifts in consumer behavior, and thereby triggering a range of economic risks. The imperative for governments globally is to accurately assess the economic implications of such events, formulate responsive policies, and ensure stable economic functioning and recovery of employment and production. Nevertheless, a challenge arises with the fixed-basket approach underlying official price indices, which struggles to swiftly reflect notable shifts in consumer spending. This lag exacerbates inaccuracies in inflation measurement, complicating the development of macroeconomic policies, especially in terms of monetary policy formulation.
In 2020, economic activities encountered unprecedented shocks, with numerous countries and regions implementing varying degrees of lockdown measures. Access to goods and services was hindered, leading to product scarcity and significant reductions in spending, thereby altering consumption patterns and the diversity of products and promotions. Conventionally, inflation metrics such as the Consumer Price Index (CPI) are constructed upon a static basket of commonly purchased goods. The pandemic's disruption caused a radical change in the actual mix of goods and services consumed, rendering the pre-pandemic basket ineffective in reflecting current consumer spending patterns under such extraordinary public emergencies. This has led to a decrease in the accuracy of inflation and consumption measurements. Research into the deviations of price indices during the pandemic has become a pivotal case for policymakers in adapting to rapidly evolving economic scenarios. Insights derived from the analysis of such unforeseen public events are invaluable for guiding future policy in the face of rapid changes in economic conditions, including consumer behavior.
Utilizing data from the 2019-2022 China Urban and Rural Integration Household Survey and real-time U.S. bank card consumption data, this study estimates the post-impact differences in consumption basket weights and CPI discrepancies between China and the U.S. The findings reveal: (1) A marked differentiation in the weights of China's consumption basket, particularly in the early stages of the impact, where CPI underestimation was notable. However, the overall deviation was limited, indicating a more manageable situation in comparison to the U.S. This attenuation of inflation discrepancy post-impact correlates with economic recovery. (2) There are limitations in current methods for correcting inflation measurement discrepancies. The quarterly consumption expenditure surveys, as opposed to real-time data, demonstrate inadequacies. Thus, there is a critical need to refine these surveys and adapt promptly to consumption pattern changes to derive more accurate price indices.
In light of these findings, several policy implications are suggested. First, the timely publication of CPI weight information, with increased frequency of weight updates, should be considered. If feasible, releasing detailed weight information for CPI categories and enhancing the frequency of updates can better reflect changes in consumption expenditure structures and reduce biases in inflation index compilation. Second, enhancing and refining consumption expenditure surveys is imperative. This includes addressing the treatment of legacy products, adjusting for product quality, broadening the statistical coverage of goods and services such as financial insurance and legal consulting, and leveraging big data from e-commerce and financial institutions to track expenditure changes. These measures aim to more accurately represent actual resident expenditure and minimize biases in inflation index calculation. Third, the adoption of higher international standards and emphasizing forward-looking inflation assessments are advised. While adhering to the CPI handbook's basic requirements, there should be an active assessment and implementation of international standards and correction methodologies. In the future, utilizing high-frequency trading and other micro data for quantitative analysis can help estimate and correct inflation measurement biases, thereby addressing the lag in consumption expenditure surveys. Building upon this foundation, empirical analysis can be conducted on changes in consumption expenditures and the mechanisms influencing inflation measurement biases under different shocks.
The potential contributions of this paper span several dimensions. Firstly, it provides empirical evidence on inflation measurement discrepancies in shock events through a comparative analysis of China's adjusted and official CPI trends during shocks, and by examining discrepancies between China and the U.S. in the early stages of these events. The goal is to identify both commonalities and differences in inflation measurement across both nations under similar shocks, with a view to refining China's CPI measurement approach. Secondly, by focusing on the initial 2020 shock case, the study enriches the understanding of the impact of such events on macroeconomic indicators like consumption expenditure and inflation. It offers a unique perspective on real-time changes in consumption expenditure resulting from demand shocks, providing key insights into the assessment of specific industry impacts and the precise implementation of targeted structural policies. Lastly, in terms of policy response and evaluation, the proposed real-time price index adjustment methodology facilitates prompt identification and calibration of inflation risks during shock events. This methodology offers guidance to fiscal and monetary authorities for accurate price trend monitoring, reducing the risk of inflation miscalculation, and enabling effective shock response strategies. Furthermore, this approach is instrumental in leveraging real-time data to inform decision-making, thereby enhancing the efficacy of China's macroeconomic policy frameworks, improving governance mechanisms in the face of shocks, and providing robust support for risk prevention strategies pertinent to such events.

In the face of various uncertainty shocks occurring frequently worldwide, enhancing macroeconomic resilience is crucial to promoting sustainable economic development and maintaining economic security. Improving a country's economic resilience requires a comprehensive and in-depth understanding of the main influencing factors of macroeconomic resilience and their mechanisms. Previous studies have examined the impact of real economic factors on macroeconomic resilience, such as a country's innovation capability, economic openness, industrial structure, market size and human capital. Previous researches have obtained some considerably valuable conclusions. However, modern macroeconomics is based on a highly developed modern financial system. It is worth noting the fact that countries or economies with different financial development and financial systems show significant differences in their macroeconomic resilience in the face of the same external uncertainty shocks (such as an oil shock or a global financial crisis). This means that in addition to being influenced by real economic factors such as industrial structure and innovation capability, a country's macroeconomic resilience may also be related to its financial structure. The purpose of this study is to analyze the impact of financial structure on macroeconomic resilience.
Based on the theoretical analysis of the risk absorption effect and innovation support effect of financial structure, this paper proposes that financial structure may have a non-linear effect on macroeconomic resilience. In terms of empirical strategies, this paper first uses the data of 68 countries and regions from 2000 to 2019 to empirically test the impact of financial structure on macroeconomic resilience by constructing a panel threshold model. Secondly, on the basis of defining different types of real economy shock and financial crises, we examine the heterogeneity impact of financial structure on macroeconomic resilience under different types of shock. Finally, this paper examines the possible mechanisms by which financial structure affects macroeconomic resilience.
The results show that the impact of financial structure on macroeconomic resilience presents a positive nonlinear threshold effect, indicating that a market-oriented financial structure is beneficial for improving macroeconomic resilience. However, when the ratio of direct and indirect financing in the financial structure exceeds the threshold value of 1.48, the positive effect of financial structure on macroeconomic resilience decreases. After a series of robustness tests such as adjusting the indicator system and weights of economic resilience measurement, handling endogeneity and clustering, the research conclusions are all robust. Under the financial crisis and technological shocks from the supply side, an increase in the proportion of direct financing in the financial structure is conducive to enhancing economies' macroeconomic resilience, while an increase in the proportion of indirect financing in the financial structure is beneficial for enhancing the resilience of the economy to respond to consumption shocks from the demand side and the combination of consumption shocks and technological shocks. Changes in the financial structure mainly affect the resilience of the macro economy to respond to internal and external uncertainty shocks through two channels: innovation support effect and risk absorption effect.
In order to prevent and resolve various types of uncertainty shock that frequently occur globally and enhance macroeconomic resilience, this research first proposes to balance and coordinate the proportion of direct and indirect financing, promote financial sector to serve to enhance macroeconomic resilience, and help economies resist shocks and recover during crises. It is necessary to recognize the positive effect of increasing the proportion of direct financing in the financial structure on the macro-economic resilience, but also pay attention to the weakening effect of improving the macro-economic resilience after the proportion of financial markets in the financial structure exceeds the critical value. Second, given the heterogeneity impact of financial structure on economic resilience under different types of shock and the combination of shocks, economic regulators need to carefully assess the internal and external shocks faced by the country's economic development, and implement corresponding financial support policies and safeguard measures for key types of shock. Finally, we should give full play to the risk absorption and innovation support functions of the financial structure to enhance macroeconomic resilience. In a broader sense, in order to effectively support the real economy and enhance economic resilience, attention should be paid to the role of financial factors in reducing economic and financial risks, supporting innovation, and accumulating high-quality human capital.
The main contributions are as follows. First, it expands the research on the influencing factors of economic resilience. Based on cross-country empirical evidence, this paper focuses on the impact of financial structure on economic resilience, so as to provide a theoretical explanation for the differences in economic resilience of different countries and regions in the face of external shocks. Second, it enriches the research on financial structure and its function. This paper focuses on macroeconomic resilience, and analyzes the risk absorption and innovation support effects of financial markets and financial intermediaries when the macro economy faces adverse shocks. At the same time, this paper pays attention to the dynamic changes of the risk absorption and innovation support effects of financial markets and financial intermediaries as the financial structure changes. Third, it distinguishes the heterogeneity impact of financial structure on macroeconomic resilience under different single shocks (including real economy shocks and financial crisis) and multiple shocks. This has important practical reference value for each economy to choose different policies when facing different types of shock.

A large number of literatures have explored the reasons for the debt expansion of local financing platforms in China. However, due to the neglect of financing structure and financing sequence, the existing researches lack in-depth analysis of the driving mechanism and economic basis of the debt expansion of local financing platforms. Therefore, based on the pecking order theory, this paper uses the micro-data of China's land market network from 2006 to 2018 and the debt issuance data of financing platforms, and takes advantage of the exogenous impact of the financial crisis to investigate the structural characteristics of the debt expansion of financing platforms after 4-Trillion-Yuan Stimulus Package. Thus, it can provide theoretical and empirical support for accurately identifying, preventing and resolving the hidden debt risks of local governments.
The main conclusions are as follows. First, relative to the financial pressure faced by local governments, economic growth pressure is the main reason for promoting the debt expansion of local financing vehicles. Second, when the central government relaxes financing restrictions on local governments, those cities with high economic growth pressure will use financing platforms to prioritize large-scale expansion of non-standard debt, mainly bank loans, rather than urban investment bonds, even when considering the use of urban investment bonds. Third, the leasing of commercial and residential land can significantly encourage those cities with a large economic downturn to more aggressively access bank loans through financing vehicles, while industrial land is difficult to play a similar role.
The marginal contribution of this paper is mainly reflected in the following aspects. First, existing literature mainly focuses on urban investment bonds, while this paper integrates urban investment bonds and non-standard debt dominated by bank loans into the analysis framework, so as to examine the relevant problems of China's local financing platform debt in a more comprehensive and accurate way. Second, this paper provides direct empirical evidence for the application of the classical pecking order theory in the field of government investment and financing decision-making. Third, this paper examines the heterogeneous effects of economic growth pressure and fiscal pressure, commercial and residential land leasing and industrial land leasing on promoting the expansion of different kinds of debt of local financing platforms in a more detailed manner, thus enriching the research on the causes of debt of local financing platforms.
The research of this paper has important policy implications for accurately preventing and resolving the hidden debt risks of local governments. First, the main reason for the expansion of LGFV debt is economic growth pressure, not fiscal pressure. Therefore, we should gradually change the GDP-led performance evaluation mechanism, and change the behavior of local governments in expanding the debt of financing platforms in order to compete for economic growth from the incentive mechanism. Second, when the economy suffers from negative shocks and declines, local governments, under the pressure of maintaining growth, have a great incentive to expand non-standard debts dominated by bank loans through financing platforms, rather than urban investment bonds. Compared with publicly issued urban investment bonds, these non-standard debt issuance rules are not uniform, debt information is not public, facing greater default risk. Therefore, when preventing and resolving the hidden debt risks of local governments, the central government should consider the characteristics of different debt types and focus on the default risk of non-standard debts of financing platforms dominated by bank loans. Third, the economic basis for the expansion of non-standard debt of local financing platforms lies in the availability of high-value commercial and residential land for mortgage. However, once the real estate is in a downward cycle, the mortgage value of commercial and residential land will be greatly reduced, and the default risk of non-standard debt relying on the expansion of commercial and residential land will rise. In this regard, we should gradually promote the market-oriented transformation of local financing platforms and reduce the dependence on land resources, especially commercial and residential land. In the context of economic downturn, we should rely more on local governments for credit financing rather than relying on financing platforms to issue non-standard debt, so as to reduce the reliance on land financing.

In recent years, expectation management tools, represented by words communication of central bank, are playing more and more important roles in guiding market expectations and behaviors. China's financial system is dominated by banks, so whether the expectations of banks and their behaviors in credit allocation can be well managed by words communication of central bank, is extremely crucial for improving the ability of financial sectors in serving the real economy and building a more effective monetary policy system. Currently, it's necessary for banks to pursue reasonable credit growth with balanced allocation in order to ensure the monetary policy to be flexible, moderate, precise, and effective. Can words communication of central bank achieve these goals and how it to achieve these？ There are few studies have given the explicit answers.
Based on the monetary policy report of the People's Bank of China and other relevant texts, we construct the words communication index, and use the data of 46 commercial banks in China from 2012 to 2021 to empirically study the impact of words communication on the credit allocation of commercial banks in terms of both the total and structural effects. The main findings are as follows: (1) The direction of words communication has a significant positive impact on the credit supply of commercial banks, and the effectiveness of words communication is affected by the efficiency of information transmission and the willingness and ability of banks to supply credit. (2) There is an asymmetrical effect on the influence of the words communication on the bank credit supply. More precisely, the influence of the words communication in the loose direction is stronger than it in the tight direction. (3) By analyzing samples from different industries, we find that the credit increment caused by loose communication mainly flowed into the government platforms and real estate, which failed to effectively support the development of the manufacturing industry; while the tight communication inhibited the credit flowing into the manufacturing sector and have little impact on the government platforms and real estate. (4) After the supply-side structural reform in financial sector in 2018, the structure of credit has been obviously improved and the ability of credit loans to serve the real economy has been significantly enhanced. The policy implications of this article are as follows: (1) The central bank should strengthen the words communication with market. Meanwhile, it's necessary to pay attention to the coordination of communication and action to improve the information transmission efficiency and to ensure the growth of credit supply. (2) According to the characteristics of different banks, the central bank should actively explore diversified communication frameworks to effectively improve the communication efficiency. (3) The supply-side structural reform in financial sector should be strengthened and the central bank needs to guide the bank credit to the real economy through various means in order to avoid the structural imbalance of the economy caused by the misallocation of financial resources.
The marginal contribution of this paper may be illustrated in the following aspects: First, most of the existing studies concentrate on the impact of words communication on the capital demand, but pay little attention to the credit supply. Studies on the capital demand side often focus on listed companies and fail to reflect the complete credit demand. Several studies have noted the important role of bank lending willingness, but have not explored it in depth. We establish a connection between words communication and bank credit behavior and enrich the related literature of expectation management on the credit supply side. Second, from the perspective of the characteristics of banks and their willingness and ability to extend credit, we discuss how to improve the efficiency of information transmission and provide an empirical evidence for how to improve the effectiveness of words communication. Third, we find an asymmetric effect of the words communication on bank credit and it shows heterogeneity in different industries. Specifically, in the fields of government platforms and real estate, words communication in loose direction is more effective, which is in sharp contrast to the manufacturing sector. This finding explains the mechanism of capital misallocation from the side of credit supply. Fourth, we confirm the positive role of the supply-side structural reform in financial sector in optimizing the credit structure and improving the ability of credit funds to serve the real economy, which has policy implications.

Common prosperity refers to a state where all people achieve a decent standard of living through hard work and mutual assistance, signifying the elimination of extreme wealth inequality and poverty. Achieving common prosperity for all citizens is the essential requirement for promoting Chinese path to modernization. To achieve common prosperity, it is necessary to identify the sources of wealth inequality, so as to find an effective way to promote common prosperity. According to Roemer's “circumstance-effort” framework, personal wealth is determined by both environmental and effort-related factors. Inequality arising from environmental factors, or inequality of opportunity, should be eradicated through public policy, whereas inequality solely due to effort is considered reasonable and can be allowed within certain limits. Therefore, in promoting common prosperity, it is essential to permit a reasonable degree of wealth inequality while focusing on reducing inequality of opportunity in wealth, which is caused by environmental factors.
Based on the 2017 China Household Financial Survey (CHFS) data, this study employs the Mean Logarithmic Deviation to measure inequality levels and uses ex-ante parameter method and the conditional inference tree method (machine learning) to construct “counterfactual wealth.” We identify and calculate the proportion of inequality of opportunity within wealth inequality and decompose the sources and indirect channels of inequality of opportunity in wealth using the Shapley value method. The findings are as follows: ① In 2017, the inequality of opportunity in wealth far exceeds that in income significantly, with inequality of opportunity accounting for approximately 57% to 72% of the factors contributing to wealth inequality and about 32% for income inequality. ② The inequality of opportunity in wealth exhibits marked variations across birth cohorts, with those born in the 1950s and 1970s experiencing notably higher levels of inequality of opportunity in wealth than other cohorts. ③ Among the sources of inequality of opportunity, factors related to housing and finance contribute the most. Respondents' initial household registration type, parental education level, provincial economic development during their adolescence, the region in adolescence, housing price, and financial access rank among the foremost contributors, collectively accounting for over 85% of inequality of opportunity in wealth. ④ The impact of environmental factors—comprising individual characteristics, family backgrounds, regional elements, and macroeconomic elements—varies across birth cohorts. The contribution rate of family background to inequality of opportunity in wealth among the “1950s” to “1980s-1990s” cohorts progressively increases with each birth generation, while the contribution rate of regional factors generally shows a declining trend. ⑤ In terms of indirect channels, the education channel contributes over 10% to inequality of opportunity in wealth across all birth cohorts, the employment channel has the highest contribution to inequality of opportunity in wealth for those born in the 1950s, and the investment channel has a limited impact across all cohorts.
In light of our conclusions, it is evident that environmental factors significantly influence wealth accumulation. Therefore, addressing inequality of opportunity is a critical step in promoting common prosperity. The implementation of public policies aimed at optimizing housing regulation, narrowing regional gap, improving the regional financial system, and enhancing intergenerational mobility to progressively diminish the inequality of opportunity in wealth is a vital pathway to achieve common prosperity.
Our paper makes the following three contributions. First, it extends the study of inequality of opportunity from income disparity to wealth disparity. Most of the literature focuses on inequality of opportunity in income, analyzing the causes of income inequality. Considering the significant differences between wealth and income, this paper identifies and calculates the proportion of inequality of opportunity within wealth inequality, thus enriching and expanding the literature on the inequality of opportunity in China. Second, this paper identifies the sources and indirect channels of inequality of opportunity in wealth using the Shapley value method. Given the significant differences between income and wealth, this paper introduces factors such as economic support from parents for housing purchases, property inheritance, and housing-related environmental factors (including housing demolition, housing price growth rates, and housing system reforms) to analyze the important roles of housing wealth and inherited wealth in inequality of opportunity in wealth. Furthermore, it incorporates factors such as financial investment and property acquisition to examine the specific indirect channels through which inequality of opportunity in wealth is manifests. Third, considering the evident differences in the impact of environmental factors on each birth cohort, and the different life stages of these cohorts, this paper categorizes individuals according to their birthyear and explores the intergenerational trends of inequality of opportunity in wealth.

In light of China's transition to a new phase of economic development, the focus on quality is gaining prominence in driving economic growth. Enterprises that fail to meet criteria regarding scale, technology, and environmental protection experience a gradual accumulation of excess production capacity. Generally speaking, the longer overcapacity persists, the more profound its impact on the economy becomes. On the one hand, the rapid growth of the economy may be hindered by the existence of overcapacity, which in turn may slow down employment expansion. On the other hand, overcapacity will also force the adjustment of domestic industrial structure, leading to an increased demand for innovative and high skilled labor by enterprises. Thus, questions arise: What is the impact of overcapacity on employment？ Are there region, ownership, and industry-related disparities in this impact？ If so, what factors contribute to these differences？ Answering the above questions will not only enhance our understanding of the relationship between overcapacity and employment volatility, but also aid in identifying countermeasures to mitigate the adverse effect of overcapacity.
To explore this topic, this article utilizes industrial enterprise data from China spanning 1998 to 2007, as well as panel data from various manufacturing sub-industries across different regions in China from 1999 to 2020. The employment growth rate of different industries in different regions is calculated, and the capacity utilization rate is measured using the stochastic frontier analysis (SFA) method. Subsequently, we delve into the relationship between overcapacity and employment growth in detail. In addition, we eliminate the potential impact of resolving overcapacity on labor demand and re-examine the relationship between overcapacity and employment volatility. Furthermore, we characterize manufacturing employment volatility from three dimensions: the employment creation rate, the employment destruction rate, and the employment net growth rate. Meanwhile, we endeavor to identify the mechanisms through which overcapacity affects employment volatility, thereby providing a test of employment creation and destruction theory in the context of Chinese style overcapacity.
Our study yields five key findings. Firstly, overcapacity significantly suppress employment growth overall. Secondly, only overcapacity in the eastern region exhibits a notable inhibition effect on the employment growth rate from a regional perspective. Thirdly, only the overcapacity of private enterprises exerts a significant exclusion effect on employment growth while considering enterprise ownership. Fourthly, the decline in the employment growth rate caused by overcapacity in the manufacturing industries is primarily evident in labor-intensive ones from an industry nature standpoint. Finally, the mechanism analysis shows that a high degree of financialization strengthens the employment destruction caused by overcapacity in the manufacturing industries, while corporate social responsibility and industrial structure upgrading mitigate employment volatility stemming from overcapacity. Building upon these conclusions, we tentatively propose the following policy recommendations: (1) regions should continue to address overcapacity and minimize its adverse impact on employment; (2) skill training should be provided to enhance and diversify the vocational skills of ordinary workers; (3) private enterprises ought to accelerate their transformation pace, while state-owned enterprises need to establish suitable internal competition mechanisms; (4) labor-intensive industries should regard the improvement of technological content of products as the direction of industrial transformation; and (5) local governments should focus on creating a healthy and orderly financial market environment, guiding manufacturing enterprises to manage financial assets prudently and focus on their main business.
This article offers three innovative contributions. Firstly, by covering the four stages of overcapacity experienced by China since the 1990s, this article uses two sets of data: panel data on Chinese industrial enterprises from 1998 to 2007 and panel data on manufacturing sub-industries in various regions from 1999 to 2020. Secondly, this article comprehensively considers region, ownership, and industry-related differences in the impact of overcapacity on employment volatility, enabling the identification of targeted measures to address the impact of overcapacity. Thirdly, we attempt to clarify the mechanism through which overcapacity affects employment volatility by examining the degree of financialization development, corporate social responsibility, and industrial structure upgrading.
For future research, an interesting direction would be to compare the effect of overcapacity on employment volatility between developed and developing countries and uncover the underlying reasons behind national disparities. Obviously, such a study would enrich the research on the employment volatility effects of overcapacity.

The report of the Twentieth National Congress of the Communist Party of China pointed out that Chinese path to modernization is a modernization in which people and nature coexist in harmony. We should adhere to sustainable development and unswervingly follow the path of civilized development featuring production development, rich life, and good ecology. The Guiding Opinions on Accelerating the Construction of world-class Enterprises, released by the Central Committee for Deepening Reform and the State Council in 2022, propose to build world-class enterprises. Unlike the traditional growth model that targets shareholder profits, the ESG core business model will promote inclusive growth and upgrading of Chinese enterprises, shaping specific advantages for China to build world-class enterprises. In addition, from the practice of China's economic development, it can be seen that Chinese economy has shifted from a stage of high-speed growth to a stage of high-quality development. A series of problems, such as aging population, widening income distribution gap, and climate change, have gradually become prominent. As an important driving force for economic growth, enterprise upgrading will become a key task for economic transformation and development, and research on enterprise upgrading has also become an important growth point in the theoretical field. On a global scale, the regulatory pressure on sustainable management in emerging markets is also increasing. The practice of ESG regulation in China started relatively late, but it is gradually catching up with other countries, which brings challenges and opportunities for the upgrading of Chinese enterprises.
So has the continuous transparent disclosure of ESG activity information promoted the upgrading of enterprises？ Some literature suggests that the improvement of ESG performance directly promotes the improvement of enterprise efficiency and brings better financial performance to the enterprise. Some literature suggests that corporate investment in ESG may not bring additional direct monetary benefits to the company. The reputation effect of enterprise participation in ESG activities is mainly enjoyed by managers (such as general managers), while the potential risks and costs related to ESG investments are borne by shareholders. Overinvestment in ESG has squeezed out core technology research expenses, which has had a negative impact on the company's high-quality development. The theoretical research with divergent views mentioned above is mostly based on the study of mature market structures in developed economies. In emerging market economies with gradually established high standard market systems, the relationship between ESG activity performance and enterprise upgrading needs further exploration and testing. The logical argument of this article is to introduce the rating of ESG activities into the theoretical analysis framework, comprehensively examining the impact of ESG activity performance on enterprise upgrading.
Based on relevant research, this article summarizes and analyzes four key mechanisms by which ESG activity performance affects enterprise upgrading: first, financing constraint channel; second, agency cost channel; third, reputation effect channel; and fourth, information disclosure quality channel. The performance of ESG activities not only significantly affects the allocation of credit funds in China's capital market, but also improves the efficiency of fund allocation by market entities willing to allocate funds to companies with better ESG activity performance. Moreover, ESG activity performance is conducive to alleviating information asymmetry among stakeholders and improving corporate governance. In addition, good performance in ESG activities can significantly enhance a company's reputation, promote the quality of information disclosure, and in turn promote the upgrading of the company. This indicates that increasing the investment of listed companies in ESG is conducive to promoting sustainable growth and development of enterprises. The advantages brought by ESG activities of enterprises provide great assistance in strategic and operational aspects for China to build world-class enterprises and enhance domestic and international competitiveness. However, it should be noted that the uncertainty of ESG ratings will to some extent weaken the promoting effect of ESG activity performance on enterprise upgrading.
This article further verifies the four channel mechanisms mentioned above by examining the empirical data of listed companies from 2008 to 2021, providing the latest empirical evidence for the development of integrated emerging market environment, society, and governance. The performance of ESG activities of listed companies has significantly and steadily promoted the upgrading of enterprises, which is reflected in the growth of total factor productivity, patent output (including green patents), economic value added, financial performance, and comprehensive upgrading indicators.
Compared to existing research, this article may contribute in the following three aspects: firstly, this article may be an earlier study exploring the impact of corporate ESG activity performance on corporate upgrading. Unlike most literature on external governance affecting corporate upgrading, this article attempts to explore the role of third-party agency ESG ratings in the process of corporate upgrading from the perspective of third-party agency ratings. It reveals that corporate ESG activities mainly affect corporate upgrading through four channels: reducing financing constraints and agency costs, and improving corporate reputation and information disclosure quality, Enriched and expanded research in related fields such as the high standard market system and ESG impact. Secondly, in addition to the total factor productivity indicator, this article also constructs a multidimensional indicator evaluation system for enterprise upgrading from the perspectives of patent output, economic value added, and financial performance. The principal component analysis method is used to construct a comprehensive upgrading indicator that integrates most of the upgrading indicators, providing evidence that ESG activities promote enterprise upgrading in more fields; Third, this paper not only uses the logarithm of the number of ESG funds that hold this stock as the instrumental variable of ESG scores to alleviate the possible endogenous problems, but also constructs multiple DID model policy impact variables such as environmental protection law, dual carbon policy, low-carbon city pilot policy, smart city pilot policy, broadband China, and the "the Belt and Road" to eliminate the interference of external policies on the role of ESG activities and ensure the robustness of the results as far as possible.
The results of this study help market participants (including businesses, investors, and regulatory agencies) fully recognize the impact of ESG information disclosure on business and social development. Based on the research conclusion of this article, it contains the following policy implications: firstly, to improve the evaluation and information disclosure mechanism of corporate ESG. Enterprises should actively disclose non-financial information, strengthen ESG practices, improve ESG ratings, which is conducive to improving corporate governance capabilities and overall performance, in order to achieve better ESG investment returns. Enterprises should prioritize improving environmental protection, social responsibility, and corporate governance as important strategies to promote sustainable development and drive long-term value growth. Secondly, in the context of sustainable development, the government should improve the ESG support system and measures for listed companies, reduce capital allocation friction, and lower the cost of corporate debt financing to enhance the vitality of the capital market and optimize resource allocation functions. Thirdly, considering the path dependence of ESG activities, the government should strengthen the supervision of corporate ESG behavior, reduce internal and external information asymmetry, and establish a sustained and substantial ESG participation system.

China attaches great importance to technological innovation. Enterprises are the main body of technological innovation. How to further increase the R&D investment of enterprises and improve their innovation capabilities is an important issue that urgently needs to be considered. The capital market has important functions and advantages in supporting enterprise innovation. In recent years, with the comprehensive deepening of capital market reform, a multi-level stock market system has gradually formed, including the Main Board, Small and Medium Enterprise Board, Growth Enterprise Market, Science and Technology Innovation Board, National Equities Exchange and Quotations, and Four Board, which can provide financing channels for enterprises of different scales, industries, and stages of development.The reform of registration system has also been fully implemented after being piloted on the Science and Technology Innovation Board, Growth Enterprise Market, and Beijing Stock Exchange.The rapid development of the stock market has created a favorable environment for innovation. On the one hand, the number of listed companies is showing a continuous increase trend. On the other hand, listed companies have a wide range of industry coverage. In this context, previous studies have explored the impact of enterprise listing on innovation from various aspects. However, there is still a lack of analysis based on the perspective of the industrial chain.
Using Chinese listed companies from 2007 to 2021 as a sample, this article studies the impact of the degree of listing of enterprises in the industrial chain on enterprise innovation investment. The main conclusions are as follows: The degree of listing of enterprises in the industrial chain has a significant promoting effect on enterprise innovation investment, that is, the higher the degree of listing of enterprises in the industrial chain, the more innovation investment they make. Moreover, the degree of listing of enterprises in the industrial chainhas a long-term promoting effect on enterprise innovation investment. Mechanism analysis found that, when the degree of industry information asymmetry is low and the degree of product market competition is low, the degree of listing of enterprises in the industrial chain has a more significant promoting effect on enterprise innovation investment. This indicates that the degree of listing of enterprises in the industrial chain can promote enterprise innovation investment by reducing industry information asymmetry and intensifying product market competition. Specifically, the reduction of industry information asymmetry caused by the degree of listing of enterprises in the industrial chain can be achieved by improving the governance level of industry chain companies, the promotion effect of product market competition caused by the degree of listing of enterprises in the industrial chain can be achieved by increasing the financing demand of the industry chain. Furthermore, this article also examines the impact of enterprise specialization on the relationship between the degree of listing of enterprises in the industrial chain and enterprise innovation investment. The results indicate that when the degree of specialization of enterprise is high, that is, when the connection between the enterprise and enterprises in the same industry chain but located in other upstream and downstream links becomes closer, the degree of listing of enterprises in the industrial chain has a more significant promoting effect on enterprise innovation investment. The research findings of this article contribute to a comprehensive understanding of the positive significance of the development of the stock market.
The research contributions of this article are mainly reflected in the following aspects: Firstly, it expands the research scope of enterprise listing. Unlike existing literature that focuses on and explores the impact of whether the enterprise is listed or not, changes in the status of enterprises before and after going public, the spillover effects of enterprise listing, and the number of listed enterprises, this article uses China's input-output table data over the years to construct an indicator of the degree of listing of enterprises in the industry chain, which helps to have a more comprehensive understanding of the impact of enterprise listing. Secondly, this article supplements research related to the industrial chain. Existing literature has covered various aspects such as production chain location, industry chain structure, industry chain correlation, industry chain integration, industry chain organization, and industry chain pricing. Unlike the above literature, this article focuses on the role of the degree of listing of enterprises in the industrial chain and explores the impact of the degree of listing of enterprises in the industrial chain on enterprise innovation investment, which can provide theoretical guidance for further improving the modernization level of the industry chain. Thirdly, this article takes the degree of listing of enterprises in the industrial chain as the starting point to study its impact, mechanism, and heterogeneity performance on enterprise innovation investment, which to some extent enriches the relevant research on the influencing factors of enterprise innovation investment.

China is actively exploring new paths, fields, and models for the deep integration of “digital technology and justice”, which is an important measure in building a rule-of-law business environment in the new era, significantly accelerating social justice. Since the 18th National Congress of the Communist Party of China, the rapid development of emerging digital technologies has provided an excellent opportunity for China's judicial digitalization reform. Judicial auction, an important method for disposing involved properties in legal cases, is crucial in protecting the rights of all parties involved and relates to the goal of “thoroughly resolving the ‘last kilometer’ of difficulties in execution”. It serves economic functions such as resolving breach of contract debts and maintaining financial system stability. Promoting online judicial auctions nationwide is one of the most significant reforms of “digital technology and justice”. However, both academic and practical circles lack necessary attention and discussion on the economic role of online judicial auction.
Online judicial auction is a legal execution process where courts at all levels dispose of properties through internet auction platforms and online electronic bidding. Compared to traditional consignment auction, online judicial auction has obvious advantages: it simplify procedures, break geographical boundaries, significantly expand buyer reach, thus enhancing judicial execution efficiency and rapid asset realization. Additionally, introducing third-party online platforms ensures transparency, promoting fairness in judicial execution. Broad market participation maximizes transaction prices through competitive bidding, safeguarding “creditors' rights”. In China, cases involving judicial auctions often relate to credit-debt disputes. With the promotion of online judicial auctions, banks, as representatives of creditors, become primary beneficiaries. It's generally believed that increased value and faster debt recovery positively affects banks' lending. Online judicial auction effectively improves the efficiency and fairness of judicial execution compared to traditional judicial auctions, promotes the better recovery of bank debt, and then stimulates the willingness of banks to provide credit resource.
To verify the aforesaid hypothesis, this paper uses samples from urban and rural commercial banks from 2007 to 2020, based on the phased implementation of online judicial auction by courts nationwide. It examines the reform's impact on local bank credit supply. Results show that online judicial auction significantly enhances the credit supply of local commercial banks. The mechanism works by protecting bank rights through improved judicial execution efficiency and fairness, thereby increasing their willingness to supply credit. The effect is more pronounced when the local area has a higher proportion of real estate auctions, poor traditional auction conditions, and greater market demand for judicial auctions. Furthermore, the increased credit supply from online judicial auction significantly alleviates financing constraints for SMEs, especially private enterprises, indicating that digital justice reforms benefit financial services for the real economy.
This paper contributes in the following ways: firstly, it deepens the research content of the digital economy. The digital economy is an important driving force in China's modernization process, but existing literature mainly focuses on corporate digital transformation, with insufficient attention to judicial digitalization reforms. This paper is the first empirical study on the substantial impact of the integration of “digital technology and judiciary execution”. Secondly, it enriches economic literature related to China's judicial reforms, an important practice in building a rule-of-law business environment and vital for a healthy financial system. The paper explores the impact of implementing online judicial auction on financial services for the real economy, providing a comprehensive insight into the economic significance of judicial auction reforms and filling the gap in related economic studies. Lastly, it expands academic understanding of factors influencing credit resource supply. Credit resource supply has always been a focus for policymakers and scholars. Literature from a rule-of-law perspective primarily uses cross-country data or explores from the overall rule of law environment, with few studies from a judicial perspective focusing on litigation. This paper shows that judicial auction reforms alleviate difficulties in China's judicial system and optimize credit resource supply, offering significant policy reference for constructing a “rule-of-law system, financial system and real economy” coordinated development pattern, thereby advancing China's modernization.

It is very common in various countries for paternal or maternal grandparents to provide childcare for their grandchildren. Moreover, this practice is even more prevalent among grandparents in China due to cultural traditions and the insufficiency of formal care services provided by the public and private sectors. Meanwhile, with the acceleration of population aging and a decline in economic growth rates, many countries are facing long-term financial sustainability risks in their pension systems. To address this risk, many countries have either implemented or are preparing policies to delay the retirement age. The Chinese government is also set to implement such a policy in the next few years. The extension of the retirement age prolongs people's working years and social security contribution periods, and it delays the time for working people to receive pension benefits. This can alleviate the financial pressure on pension funds to a certain extent. On the one hand, delaying retirement not only increases individuals' wage income during their later years but also enhances parents' monetary transfers to younger generations, potentially contributing to higher fertility rates. On the other hand, delaying retirement may have adverse effects on working grandparents providing childcare for grandchildren, increasing the time costs associated with childbearing, and consequently exerting a negative impact on fertility rates. Furthermore, the reduction in intergenerational care time places an additional burden on young parents, increasing the time they need to allocate to childcare. This, in turn, diminishes the labor supply of the younger generation, affecting investment in child education, human capital accumulation, and economic growth.
How does delaying retirement affect fertility, human capital, and thus economic growth？ To the best of our knowledge, there is limited literature that examines the micro-mechanism of how delaying retirement influences economic growth, particularly from the perspective of intergenerational care. In terms of policy implications, if delaying retirement has a negative effect on fertility or economic growth, the government should implement corresponding supportive policies to mitigate these adverse effects. Research on these issues holds significant theoretical value and carries important policy implications.
In view of this, this paper employs an extended dynastic family model to examine the micro-mechanism of delaying retirement affecting economic growth. The results show that the effect of delaying retirement on fertility depends on young individuals' preferences for the number of children, as well as the comparison between income effects and grandparents' childcare effects. Delaying retirement extends working years and raises wage income, contributing to an increase in bequests transferred to younger generations, thereby positively affecting fertility rates—referred to as the income effect. However, delaying retirement reduces time transfers from grandparents to young people, raising the time costs associated with childbearing and exerting a negative impact on fertility rates—referred to as the grandparents' childcare effect. Numerical simulations reveal that when individuals have a relatively low preference for the number of children, the income effect dominates, leading to an increase in fertility rates. Conversely, when individuals have a strong preference for the number of children, the grandparents' childcare effect dominates, resulting in a decrease in fertility rates. As delaying retirement reduces the time transfer from parents to younger generations for childcare, increasing the time young individuals spend on childcare, it diminishes their labor supply. This, in turn, reduces the wage income of the younger generation, potentially leading to decreased educational investments in each child, which is unfavorable for long-term economic growth. However, numerical simulations suggest that the magnitude of this reduction is limited.
To mitigate the adverse effects of delaying retirement on fertility rates and long-term economic growth, the government could consider several aspects: (1) Incentive compatibility policies for receiving different pension shares can be set according to different reference points of retirement age. A flexible policy for the age at which individuals can access their pensions could help reduce the negative impact of the policy on grandparents' childcare. (2) The government should vigorously develop a public childcare system and incorporate childcare services for infants aged 0-3 into the public service system. Additionally, provide policy support for families that require intergenerational care, such as a leave system similar to maternity leave. For grandparents who need to care for newborn grandchildren while still working, they could apply for a period of intergenerational care leave, mitigating the impact of delaying retirement on intergenerational care time. The government should develop both formal and informal childcare simultaneously to alleviate the work-life balance of women during the childbearing period. (3) Recognize that the cost of raising children and education expenses are crucial factors influencing fertility. The government can consider policies such as tax incentives, childcare subsidies, and housing support for families during the childbearing and child-rearing years. Finally, provide support and guarantees for women to return to work or employment after childbirth, fostering a childbirth-friendly social environment and reducing the opportunity costs associated with childbearing.
The paper employs an extended dynastic family model with grandparents' childcare to study the micro-mechanism of the impact of delaying retirement on economic growth. The study aims to enrich and deepen the existing literature on the economic effects of delaying retirement. A potential avenue for future research is to explore the effects of delaying retirement on pension replacement rates, individual pension wealth, pension fund balance, and welfare from the perspective of grandparents' childcare.