Do Geopolitical Risk, Economic Policy Uncertainty, and Trade Policy Uncertainty Drive Corporate Carbon Transition Risk in China?

ABSTRACT This study examines the effects of geopolitical risk (GPR), economic policy uncertainty (EPU), and trade policy uncertainty (TPU) on corporate CTR in China from January 2010 to December 2022. Using a combination of complementary quantile‐based approaches, including quantile‐on‐quantile regression (QoQR), quantile‐on‐quantile Granger causality (QoQGC), and wavelet quantile correlation (WQC), this study reveals substantial nonlinear, asymmetric, and time–frequency‐dependent relationships between external uncertainty and corporate CTR. The QoQR results show that GPR, EPU, and TPU generally increase corporate CTR as uncertainty rises from low to moderate levels; however, their marginal effects weaken and, in some regimes, become negative at extreme uncertainty levels. The QoQGC results reveal that predictive causality varies across uncertainty regimes: GPR and EPU exhibit strong predictive relevance at extreme uncertainty levels, whereas TPU shows predictive relevance across a broader range of low‐to‐moderate uncertainty regimes. The WQC results demonstrate that the uncertainty–CTR relationship also varies across both the CTR distribution and time‐frequency dimensions, with stronger positive co‐movement generally observed at middle‐to‐upper CTR quantiles and over medium‐ to long‐run horizons. Overall, the findings demonstrate that external uncertainty does not affect corporate CTR uniformly; rather, its transmission is regime‐dependent and time‐varying, highlighting the importance of uncertainty‐specific and adaptive strategies to support China's low‐carbon transition.