Does China's direct investment in “Belt and Road Initiative” countries decrease their carbon dioxide emissions?

Abstract

Carbon dioxide emissions of “Belt and Road Initiative” countries account for one-third of the global value. China's direct investment in “Belt and Road Initiative” countries has a significant impact on their carbon dioxide emissions. This paper studies the effect of China's direct investment on carbon dioxide emissions in “Belt and Road Initiative” countries from 2003 to 2017. We apply a panel quantile model and the MCMC optimisation method to estimate the parameters. Then, 67 “Belt and Road Initiative” countries are divided into two groups to compare the different impacts of China's direct investment on their carbon dioxide emissions. The empirical results show that China's direct investment has a negative impact on the carbon dioxide emissions of “Belt and Road Initiative” countries no matter the sample is grouped or not. In the group of high-income countries, every 1% increase in Chinese investment reduces their carbon dioxide emissions by 0.04%. In the low-income group, for every 1% increase in China's direct investment, the national carbon dioxide emissions are reduced by 0.02%. Thus, it is suggested that China should further strengthen investment cooperation with “Belt and Road Initiative” countries in the future to promote global carbon dioxide emission reduction.