Does Climate Transition Risk Widen Inter-City Economic Disparities? Evidence from 285 Prefecture-Level Cities in China

In the global efforts to combat climate warming and promote low-carbon development, the transition risks stemming from continuous adjustments and changes in policies, technologies, and markets have become another important driver exacerbating inter-city economic divergence with disparate industrial foundations, resource endowments, and transition prerequisites. Based on a mathematical economic modeling framework, this article constructs a Recentered Influence Function (RIF) regression model to empirically examine the direct impacts and heterogeneous characteristics of climate transition risks (proxied by climate policy uncertainty) on inter-city economic disparities across 285 Chinese cities from 2005 to 2024 and further analyzes the underlying mechanisms and feedback effects through mediation and moderation effect models. The empirical results reveal that climate transition risks widen inter-city economic disparities and amplify the polarization effect in inter-city economic development. Moreover, the positive impact of transition risks on inter-city economic disparities is more pronounced in the types of high-growth, non-resource-based, and Eastern Chinese cities. The mediating transmission channels through which climate transition risks affect inter-city economic disparities include the lock-in effect of industrial structural imbalances and disparities in green technology; improvements in energy efficiency and green credit availability can mitigate the amplifying influence of transition risks on inter-city economic inequality. This study enriches the theoretical foundation in the field of climate finance regarding transition risks and balanced regional development, which provides practical guidance and policy evidence for addressing inter-city economic disparities arising from climate change and energy transition, as well as advancing coordinated and balanced urban economic development via green transformation.