Carbon peaking pressure and corporate R&D investment

Abstract

The goal of “double carbon” presents both challenges and opportunities for China's manufacturing sector. This study examines the impact of regional carbon peaking pressure (CPP) on corporate R&D investment, using panel data from Chinese A-share listed manufacturing firms between 2015 and 2020. By employing a two-stage least squares approach, we find that higher CPP significantly boosts R&D investment, particularly in R&D-intensive firms, state-owned enterprises, and firms with lower tax payments. In contrast, firms with lower R&D investment ratios, private firms, and major tax contributors exhibit a weaker response to CPP. In addition, while CPP increases R&D investment, it also introduces trade-offs, such as reduced management expenses and temporary declines in productivity.