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A Barometer of Climate Change: Does the US–China Tension Exacerbate Its Risks?

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  • Chia-Ling Yao
  • Pai-Chin Huang
  • Chi-Wei Su
  • Oana-Ramona Lobonţ
  • Meng Qin

Abstract

Exploring the roles played by US–China tensions is essential to mitigating potential risks associated with climate change on every continent. In this respect, the methodology for this research involves a comprehensive approach, including full-sample and sub-sample analyses, to investigate the complex link between the US–China Tension Index (UCTI) and the Climate Physical Risk Index (CRI). Experimental evidence demonstrates that UCTI exerts both a facilitating and an inhibitory effect on CRI. The positive sign suggests that high tensions between the US and China heighten climate risks in specific circumstances. On the other hand, the negative effect of the interactive term reveals that even at lower levels of tension, the relentless pursuit of industrialization and urbanization heightens climate-related risks. Conversely, CRI exerts positive and negative effects on UCTI, where climate risks exacerbate the US–China tensions during Trump’s election and early presidency. However, post-COVID-19, these risks could foster greater cooperation between the two nations. Amid escalating uncertainties in US–China relations and surging climate risks, this research formulates targeted policy suggestions designed to alleviate tensions between the US and China and effectively address the accompanying climate risks.

Suggested Citation

  • Chia-Ling Yao & Pai-Chin Huang & Chi-Wei Su & Oana-Ramona Lobonţ & Meng Qin, 2025. "A Barometer of Climate Change: Does the US–China Tension Exacerbate Its Risks?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 61(13), pages 4124-4137, October.
    • Handle: RePEc:mes:emfitr:v:61:y:2025:i:13:p:4124-4137
    DOI: 10.1080/1540496X.2025.2501231
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