Who Absorbs Climate Risk? Institutional Transmission and Risk Sharing in Chinese and U.S. Bond Markets

Abstract

Bond-market climate research usually asks whether exposure changes yields. That is incomplete because a yield is only one point in a chain through which losses may be recognized, delayed, insured, guaranteed, refinanced or transferred to public balance sheets. This structured review compares Chinese corporate bonds and U.S. municipal bonds through five layers: information, pricing, contracts, liquidity and public support. U.S. municipal studies more directly identify the roles of maturity, insurance, pledged revenues, mitigation and federal assistance. Chinese studies more often document environmental or climate-related financing effects where ratings, state ownership and guarantees alter risk visibility and loss allocation. The evidence does not rank either market as more resilient; it shows that similar hazards reach investors through different obligors, information systems and loss-sharing arrangements. Companion diagnostics illustrate measurement boundaries and are not pooled cross-country estimates. An absorber is the private or public balance sheet that contractually, institutionally or de facto bears part of a climate-related loss. The review proposes an auditable architecture linking legal-entity exposure, disclosure, pricing, credit enhancement, liquidity surveillance and contingent fiscal support, plus a feasible comparative design using common standardized hazards and outcome families estimated separately within each market.

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