Utilizing a dynamic computable general equilibrium (CGE) model, this paper critically assesses the potential distortions and efficacy of various revenue-neutral carbon emission trading schemes (ETSs) in China, through government subsidies and value-added tax (VAT) relief strategies aimed at achieving peak carbon emissions before 2030. The analysis reveals that reallocating market revenues to the production sector, either through government subsidies or VAT reductions, can feasibly attain carbon peaking before 2030, with minimal impact on GDP. Notably, both government subsidies and VAT cuts foster output growth in the oil, gas, and ETS-covered sectors. Moreover, directing carbon market revenue toward ETS-covered industries via VAT relief emerges as the most effective approach to reducing income disparities. In contrast, redistributing carbon market revenue to non-ETS-covered industries via VAT relief is found to be the least effective in promoting social equity. The study emphasizes that the reallocation of carbon market revenues to ETS-covered sectors is paramount. This strategy not only regulates the overall energy consumption effectively but also steers the nation towards a more sustainable and optimized energy consumption pattern. In light of these findings, this paper offers detailed insights and tailored policy recommendations, aiming to assist policymakers in striking a balance between environmental goals and economic and social imperatives.

The COVID-19 crisis has caused a huge negative shock to economic activities worldwide, leading to a reduction in income and changes in income distribution. Intergenerational mobility is an important indicator of sustainable social development. This paper explores the short-term impacts of the sudden COVID-19 pandemic on intergenerational income mobility and personal income in China. Using the variation in the number of confirmed cases across provinces, we construct a province-level pandemic intensity index and combine it with individual data from the China Family Panel Studies (CFPS). We apply a general difference-in-difference strategy to identify the causal effect of the pandemic on intergenerational income mobility. We find that personal income is positively related to parental income, and that the COVID-19 crisis has caused a decline in individual income and exacerbated intergenerational income persistence. A more intense COVID-19 pandemic shock is associated with a larger increase in intergenerational income elasticity and intergenerational income rank–rank slope. We found that with one standard deviation increase in local pandemic intensity, the intergenerational income elasticity increases by 0.315 and the intergenerational income rank–rank slope increases by 0.198 on average. The mechanism testing suggests that heterogeneous effects among different groups are the force underlying the results. Low-income, low-skilled, and low-parental-income individuals have suffered a more severe impact from the pandemic shock.