Purpose: Extensive macro- and micro-economics research has been conducted on China's tax reform, which replaced business tax with value-added tax (VAT). However, existing studies have not clarified the reform's impact on firm-level investment decisions. Hence, this study explored the effect of replacing business tax with VAT on firms' investment efficiency.Design/methodology/approach: The study used 2010–2018 data from China's A-share listed companies and a difference-in-differences (DID) model to explore the effect of the reform on firm-level investment decisions.Findings: The authors found that China's tax reform has improved investment efficiency in underinvested firms, increased liquidity and decreased the level of reliance on external financing. The tax reform had a greater effect on investment efficiency in firms with lower liquidity and higher external financing reliance. Its effect was also more significant among non-state-owned and small companies.Originality/value: This study fills the aforementioned research gap by exploring the effects of China's tax reform, thus providing a theoretical reference and a basis for policymaking.

Utilizing a panel dataset of 273 prefecture-level cities in China from 2000 to 2019, this study evaluates the impact of the low-carbon city pilot (LCCP) policy on green total factor productivity (GTFP). This study calculates GTFP via a hybrid function model of the epsilon-based measure. Using a staggered difference-in-differences framework, we found that the LCCP policy improves GTFP. Through its implementation, the LCCP policy exerts an increasingly positive impact. We identify promoting industrial structure optimization and technological innovation as two plausible underlying mechanisms. Heterogeneity analysis finds that the impact is more pronounced in central and western China, as well as in low-level administrative and low-marketization cities. This study provides empirical evidence for the optimization of the LCCP policy and the transformation of the low-carbon economy, and provides a basis for policy-making.

The impact of international trade and export-oriented policies on economic growth has been an important topic. Based on an evaluation of China’s Belt and Road Initiative (BRI), this study provides new evidence of the positive causal link between increasing openness and long-term economic growth. Specifically, this study evaluates the BRI’s impact on 18 key provinces in China, with a focus on total factor productivity (TFP). Utilizing a panel dataset of 284 prefectural-level cities from 2007 to 2018, we examine the causal relationship between the BRI and TFP in a difference-in-differences framework. We apply the five-pronged approach to the BRI to explore the impact mechanism and examine heterogeneity in the effect in terms of geographic location and local government efficiency. We find that the BRI significantly promotes TFP in key provinces; it increases TFP through unimpeded trade, infrastructure connectivity, technical efficiency, and technological progress. The BRI promotes TFP in key coastal provinces belonging to the Maritime Silk Road while having a relatively limited impact on the other key provinces belonging to the Silk Road Economic Belt. This study has policy implications for promoting the BRI in China. It recommends that the government collaborates with firms and financial institutions in the construction of infrastructure.