When Climate Policies Overlap: The Effect of Stacked Urban Climate Pilot Programs on Manufacturing Firms’ Supply Chain Resilience in China

Can the simultaneous deployment of two urban climate programs strengthen a manufacturer’s supply chain resilience (SCR), and does the order in which the programs are introduced matter? China’s climate-adaptive city construction (CACC) pilot, launched in 2017, overlapped in nine prefecture-level cities with the sponge city construction pilot (SCP), which had been rolled out in two batches in 2015 and 2016. This staggered overlap provides a quasi-experiment that distinguishes a stacked climate policy treatment from either program operating alone. Using a balanced panel of 552 Chinese A-share listed manufacturing firms from 2010 to 2024 and a two-way fixed-effects difference-in-differences design, this study documents that firms in cities designated under both programs exhibit significantly higher SCR after 2017 than firms in non-overlap cities, and that this difference shows no obvious pre-trend and cannot be reproduced by placebo reassignment. The preferred specification implies an increase of 0.067, equivalent to about 18.7% of the sample mean SCR. The stacked treatment is associated with three firm-level responses that track SCR, namely a higher share of green patents, greater productive risk-taking, and stronger environmental, social, and governance (ESG) performance. The effect is concentrated in the southeast of the Hu Huanyong Line, in non-state-owned enterprises, and in firms where the board chair also serves as chief executive officer. Further analysis shows that the CACC program alone does not significantly raise SCR, whereas the SCP program does; combining the two produces a larger effect than either single program, and the synergy arises mainly when climate-adaptation measures are added to a city that has already built a sponge city foundation. The findings suggest that urban climate policy should be coordinated across programs and sequenced to exploit institutional complementarities rather than evaluated program by program.