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State versus Market: China's Infrastructure Investment

Author

Listed:
  • Shuoge Qian
  • Hong Ru
  • Wei Xiong

Abstract

Amid rising global interest in state interventions, this paper examines how China’s infrastructure investments—a key macroeconomic policy tool—affect firm productivity. We focus on a policy that encourages regional governments to improve market conditions for private enterprises. Our analysis shows that a better market environment amplifies infrastructure investment spillovers. However, the overall impact remains neutral or negative despite greater gains in industries with improved market access. These findings highlight the complex interplay between state intervention and market forces, raising concerns about the effectiveness of infrastructure investments in sustaining growth, especially in regions with weak market institutions.

Suggested Citation

  • Shuoge Qian & Hong Ru & Wei Xiong, 2025. "State versus Market: China's Infrastructure Investment," NBER Working Papers 33725, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33725
    Note: CF DEV EFG PE
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    More about this item

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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