When the State Turns Down the Power: Administrative Power Rationing and Firm Production in China

Speaker：Chen Zhuo, Associate Professor, Tsinghua University

Host：Zhang Yilin, Professor, Lingnan College

Time and Date：12:30, March 17, 2026 (Tuesday)

Venue：Wang Dao Han Conference Room (101), Lingnan Hall

Language：Chinese

Abstract：

We study the real effects of China's 2021 administrative power rationing on manufacturing firms. Using an innovative plant-level measure of production based on satellite thermal infrared radiation (TIR) and the staggered adoption of city-level mandatory rationing, we implement a stacked differencein-differences design and estimate that rationing reduces plant activity by 17.2%. The effects are robust to a wide range of tests and are stronger in plants operated by private firms. Firms offset the shock by reallocating production across facilities and front-loading output, yet exposed firms experience negative short-term stock price reactions and reduce long-run capital expenditures. Overall, our results highlight both the intended and unintended consequences of China's "dual control" energy policy framework, and show how these outcomes are shaped by the interaction between government intervention and market forces.
 

Profile:

Chen Zhuo is an Associate Professor at PBC School of Finance, Tsinghua University, the deputy director of Fund of Funds Research Center, PBC School of Finance, Tsinghua University. Zhuo received his Ph.D. in Finance from Kellogg School of Management, Northwestern University in 2014. Before that, he earned his M.A. degree in Economics from Duke University in 2009 and dual bachelor degrees in engineering and economics from Peking University in 2007.

His research interests include Chinese financial markets, empirical asset pricing with a focus on market frictions, and financial econometrics. His research work has been published in academic journals including Journal of Financial Economics, Management Science, Review of Finance, Review of Asset Pricing Studies, etc. His research has won several awards, including the SFS Cavalcade Arthur Warga Award for the Best Paper in Fixed Income, the China Financial Research Conference Best Paper Award, the International Conference on Asia-Pacific Financial Markets Best Paper Award, the Second Prize in Chicago Quantitative Alliance (CQA) Academic Competition, and PanAgora Crowell Memorial Prize Finalist.