Does government subsidy stimulate or shackle new energy industry efficiency? Evidence from China.

During 2013-2017, the new energy industry in China experienced prosperous growth with the financing support of the government. To evaluate the real performance of this industry and the government subsidy effect during this period, this paper measures both the original and adjusted industry efficiencies and investigates the non-linear impact of the government subsidy. Applying a four-stage data envelopment analysis (DEA) method to a sample of listed companies during 2013-2017, we find that: (1) China's new energy industry obtains relatively a high efficiency while showing a noticeable decline after a rising trend; (2) the industry efficiency presents a downward adjustment after eliminating the environmental factors; (3) a single threshold of government subsidy is identified, indicating a shackle after a short-term positive impact; (4) the positive mediating effect of cash flow and R&D investments are identified; and whereas the management self-interest presents a negative mediating effect, (5) the regional and ownership endogeneity of the government subsidy effect are recognized.