China's carbon dioxide emissions: An interprovincial comparative analysis of foreign capital and domestic capital

Abstract

Against the background of China's further relaxation of foreign investment control and implementation of energy conservation and emissions reduction, the data of 30 provinces in China from 2001 to 2015 were used to measure the carbon dioxide emissions levels, foreign direct investment stock and domestic capital stock in various regions. The impulse response function, variance decomposition and panel causality test in the panel vector autoregressive model evaluated in detail the impact of foreign capital inflows, domestic capital inputs and economic growth on CO2 emissions in regions of different energy intensity. The study found that on the whole, foreign direct investment has no significant impact on China's carbon dioxide emissions. China's carbon dioxide emissions are mainly driven by domestic investment and economic growth; the sub-regional analysis, based on different energy intensities, shows that in areas of low energy intensity and medium energy intensity, foreign direct investment has a significant impact on CO2 emissions, and the contribution of foreign investment to CO2 emissions is between 12.2% and 14.1%. The panel causality test found that in the short term, foreign direct investment and domestic capital have significant predictive effects on carbon dioxide in various regions.