Carbon Border Adjustment and Corporate Green Transformation: International Market Connections and Investment Composition in China

Abstract

How does carbon border adjustment shape corporate green transformation through firms' international market connections? We examine its investment dimension by reconstructing annual project additions from Chinese listed firms' construction-in-progress notes. The source corpus contains 714 annual reports and yields 79 firms with 443 observations over 2018–2024. We distinguish investment in firms' own operations from capacity supplying the green transition. Broad-panel exposure coefficients are imprecise. In a 22-firm foreign-revenue extension, the 2023–2024 exposure-by-foreign-revenue interaction is positive under both specifications: combined-green coefficients are 1.950 and 1.066, while green-supply coefficients are 1.941 and 1.315. Firm wild-bootstrap p-values are 0.084 and 0.271 for combined investment and 0.076 and 0.075 for supply; industry and familywise inference yield weaker evidence. Green-supply signs persist under single-firm deletion and across three monetary units. The findings locate the positive investment pattern at the intersection of coveredproduct exposure and established foreign business. Corporate green transformation around CBAM extends to the composition of capital formation, including capacity supplying transition-related goods. Project-based accounting makes this investment margin visible during policy preparation.

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