The effects of mixed ownership reforms on Chinese firms’ emissions

Abstract

The mixed ownership reforms, characterized by partial privatization of SOEs and state capital injection (SCI) in private firms, represent a pivotal component of China's property rights reform. While economic effects of ownership reforms have been extensively examined, their environmental consequences remain underexplored. Drawing on data from Chinese industrial firms spanning 1999–2013, this paper employs a time-varying difference-in-differences model to evaluate the effects of mixed ownership reforms on firms’ pollution emissions. The results indicate that: (1) the partial privatization of SOEs significantly reduces SO₂ emissions intensity, while SCI in private firms contributes to a reduction in SO₂ emissions; (2) partially privatized SOEs achieve reductions in SO₂ emissions intensity through the adoption of source control technologies; whereas private firms accepting SCI reduce SO₂ emissions primarily by sacrificing output; (3) the effectiveness of these reforms in reducing emissions varies depending on the intensity of the reforms, firm size, and the level of regional economic development. This study sheds light the environmental effects of mixed ownership reforms, providing offers valuable insights for advancing the sustainable development of state-owned and private enterprises.