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From Heat to High-Tech: How Innovation Responds to Climate Change
Xianling Long, Zhiqiang Wang, Jul 01, 2026Climate change is driving firms to innovate—not just where heat strikes, but through shifting demand across the economy. Evidence from China shows that rising temperatures stimulate both adaptation and mitigation technologies. As households, firms, and governments respond to climate risks, new market signals travel through product markets and supply chains, encouraging higher-quality climate-related innovation across sectors.
Do Industrial Policies Improve Efficiency? Evidence From China's Credit Policies
Kaiji Chen, Yuxuan Huang, Xuewen Liu, Zhikun Lu, Yong Wang, Jul 14, 2026Are industrial policies distorting the economy, or correcting underlying distortions? Using Chinese firm-level data and a quantitative model, this article shows that preferential credit is directed toward high-markup (high-return) sectors, reallocating resources toward underfunded activities. While such policies weaken firm selection, they improve aggregate efficiency: removing them would nearly double productivity losses. The results suggest that, in a second-best environment, well-targeted industrial policies can enhance rather than reduce overall efficiency.
Why Lifting Birth Quotas Cannot Reverse Fertility Decline: Evidence from China's Universal Two-Child Policy
Hanming Fang, Chang Liu, Jul 29, 2026Drawing on nationally representative data from the 2017 China Fertility Survey and exploiting the eligibility variation created by China's Universal Two-Child (UTC) policy adopted in January 2016, we find that the policy increased births by only 0.023 per eligible woman in 2016–2017, driven almost exclusively by women who desired two or more children. County-level evidence from the 2020 population census data further shows that fertility in 2016–2020 rose primarily in places with higher average desired fertility, indicating that post-One Child Policy (OCP) China’s low fertility reflects declining demand for children rather than remaining policy constraints.
From Free Rider to Innovator: How China Became a Global Pharmaceutical Powerhouse
Panle Jia Barwick, Hongyuan Xia, Tianli Xia, Jul 22, 2026China has become a serious contender at the frontier of pharmaceutical innovation. A key policy change was the 2016 National Reimbursement Drug List, whereby the government negotiated steep price cuts in exchange for guaranteed coverage and near-universal patient access. This column shows that the reform generated both static gains from expanding patient access to existing innovative drugs, and dynamic gains from stimulating the development of the next generation of therapies. The reform policy offers rare evidence that a well-designed insurance policy can help reconcile the tension between affordability and innovation incentives.
When Real Estate Stops Driving Growth: Lessons from China and Japan
Kenneth Rogoff, Yuanchen Yang, Aug 19, 2026It is now widely recognized that real estate lies at the heart of the slowdown in China’s growth; the slowdown has been deep and persistent despite the lack of the kind of systemic banking crises that plagued many Asian economies in the late 1990s and many advanced economies during 2008-09. Exploiting a new detailed city level data set covering almost 300 municipalities, we explore the extent to which China’s slowdown can be attributed to overhang of excess real estate and infrastructure, and whether there are any similarities to Japan’s crisis that started in the 1990s. Importantly, we conjecture that other mechanisms are likely at play in real estate boom/bust episodes in addition to the classic Bernanke-style banking crisis, and that China is perhaps not so different.
