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Droughts and heat waves are increasing in magnitude and frequency, altering the carbon cycle. However, understanding of the underlying response mechanisms remains poor, especially for the combination (hot drought). We conducted a 4‐year field experiment to examine both individual and interactive effects of drought and heat wave on carbon cycling of a semiarid grassland across individual, functional group, community and ecosystem levels. Drought did not change below‐ground biomass (BGB) or above‐ground biomass (AGB) due to compensation effects between grass and non‐grass functional groups. However, consistently decreased BGB under heat waves limited such compensation effects, resulting in reduced AGB. Ecosystem CO2 fluxes were suppressed by droughts, attributed to stomatal closure‐induced reductions in leaf photosynthesis and decreased AGB of grasses, while CO2 fluxes were little affected by heat waves. Overall the hot drought produced the lowest leaf photosynthesis, AGB and ecosystem CO2 fluxes although the interactions between heat wave and drought were usually not significant. Our results highlight that the functional group compensatory effects that maintain community‐level AGB rely on feedback of root system responses, and that plant adjustments at the individual level, together with shifts in composition at the functional group level, co‐regulate ecosystem carbon sink strength under climate extremes. • It is indispensable to explore the mechanisms and impacts of climate extremes on the carbon cycle given they are increasing in magnitude and frequency.• Aboveground biomass responses to climate extremes rely on the functional group compensatory effects and feedbacks of root system responses.• Plant physiological adjustments and shifts in community composition co‐regulate ecosystem CO2 fluxes under climate extremes. [ABSTRACT FROM AUTHOR]

Aims: Long-duration drought can alter ecosystem plant species composition with subsequent effects on carbon cycling. We conducted a rainfall manipulation field experiment to address the question: how does drought-induced vegetation change, specifically shrub encroachment into grasslands, regulate impacts of subsequent drought on soil CO2 efflux (Rs) and its components (autotrophic and heterotrophic, Ra and Rh)? Methods: We conducted a two-year experiment in Inner Mongolia plateau, China, using constructed steppe communities including graminoids, shrubs and their mixture (graminoid + shrub) to test the effects of extreme-duration drought (60-yr return time) on Rs, Rh and Ra. Results: Our results indicated that extreme-duration drought reduced net primary production, with subsequent effects on Rs, Rh and Ra in all three vegetation communities. There was a larger relative decline in Ra (35–54%) than Rs (30–37%) and Rh (28–35%). Interestingly, we found Rs in graminoids is higher than in shrubs under extreme drought. Meanwhile, Rh declines were largest in the shrub community. Although Ra and Rh both decreased rapidly during drought treatment, Rh recovered quickly after the drought, while Ra did not, limiting the Rs recovery. Conclusions: This study suggests that plant species composition regulates several aspects of soil CO2 efflux response to climate extremes. This regulation may be limited by above- and below-ground net primary production depending on soil water availability. The results of this experiment address a critical knowledge gap in the relationship between soil respiration and plant species composition. With shrub encroachment into grasslands, total soil respiration is reduced and can partly offset the effect of reduction in productivity under drought stress. [ABSTRACT FROM AUTHOR]