Government Competition for Capital, Land Resource Misallocation and Carbon Emission

Abstract

Carbon emissions (CE) reduction is a crucial strategic goal for China's ecological civilization development. However, the government competition for capital (GCC) and its effects on CE through land resource misallocation (LRM) remain an issue of social concern. This paper uses research data from 30 Chinese provinces from 2008 to 2020 and examines the effects of GCC and LRM on CE using the spatial simultaneity equation (Generalized Spatial Three Stage Least Squares) and panel threshold estimation methods. This study also discovered that GCC, LRM, and CE display significant spatial heterogeneity, with an overall development pattern that follows a trend of being "high in the east and low in the west," and a spatial spreading trend. Competition for capital between local and neighboring governments not only directly increases local CE but also indirectly contributes to local CE by encouraging LRM. Further analysis finds that, once the construction of ecological civilization is incorporated into the local performance appraisal system, competition for capital among local governments will evolve into a top-by-top competition, which will directly reduce CE. However, the fixation of local governments on using land to attract capital poses a challenge against such improvements, as GCC can still contribute indirectly to CE through LRM. This study not only provides policy support for the improvement of the appraisal system of government officials, but also provides empirical references for the realization of low-carbon development from the perspective of rational allocation of land resources.