Black monster or green giant? Revaluating the role of Chinese multinational enterprises in Belt and Road countries on carbon emissions

Abstract

The Belt and Road (B&R) initiative, which brings emissions from China to the B&R countries, has gained considerable attention. By building a multiregional input-output model that distinguishes firm ownership, we measured the carbon emissions produced by Chinese multinational enterprises (MNEs) in B&R countries in reality and set two extreme counterfactual scenarios to evaluate the emission impacts of Chinese MNEs' overseas production activities on B&R countries: In Scenario 1, Chinese MNEs' production activities in B&R countries were replaced by local domestic producers; and in Scenario 2, the same amounts of outputs produced by Chinese MNEs in B&R countries were imported from China. We find that compared to the reality, in Scenario 1, a total carbon emission increase of 29.06 million tons (Mt) was observed in B&R countries, while in Scenario 2, a cumulative emission increase of 165.00 Mt worldwide, from the year 2005–2016, was observed indicating that the foreign direct investment related production activities of Chinese MNEs create a ‘green’ benefit for B&R countries and the world. Case studies show the detailed emissions mitigation effects of Chinese MNEs. This study sheds light on a possible way to facilitate the development of economies' emission control with the involvement of MNEs with higher energy efficiency and to simultaneously realise global emission mitigation goals.