The Impact of Foreign Direct Investment on China’s Carbon Emissions

Haiying Su,Yuelu Li,Fangmiao Hou,Shuhui Guo,Jianxiu Xiao,Weicong Qian

doi:10.3390/su132111911

Abstract

China is world renowned for its significant achievements in several fields. China’s economic growth has been prominent, with the country’s GDP ranking second globally. China’s Foreign Direct Investment (FDI) inflows have been significant, with the country now known as the second largest economy in the world. FDI however does have some negative consequences on China’s environment. While attracting FDI promotes economic growth through industrial upgrading, the deleterious impacts of the latter on the environment cannot be ignored. The current study analyses the actual use of FDI and carbon emissions in China from 1997 to 2018. Quantitative analysis was employed to analyze the trends of FDI and carbon emissions in China as a whole and in the respective regions, namely the eastern, central and western regions. Regression analysis was then conducted to analyze the impact of FDI on carbon emissions in China on the national level and regional levels, i.e., in the eastern, central and western regions. The conclusion of this article is that FDI will play a positive role in China’s overall carbon emissions. The study has important implications for policy. We recommend that the corresponding investment policies need to be formulated according to the different levels of economic development among the regions.

Highlights

China is the second largest economy in the world, which is the fruit of decades of continuous development
We propose the following hypothesis: the scale of foreign direct investment (FDI) has a positive effect on carbon emissions on the national level, it can reduce the intensity of carbon emissions in China to a certain extent
We can see from the country level that FDI and carbon emissions always move in the same direction

Summary

Introduction

China is the second largest economy in the world, which is the fruit of decades of continuous development. USD 40.7 billion in 2000 to USD 131 billion in 2017 since the reform and opening up in 1978 and China’s accession to the World Trade Organization in 2001 This is double the FDI in a period of less than 20 years. FDI does inject vitality into the host country’s economy and promotes industrial upgrading, but some countries may transfer their highly polluting industries to the host country. This is a hot issue which will have detrimental impacts on the host country if it is not well managed. In this paper we try to explore the impact of FDI on China’s carbon emissions in order to

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Discussion

Conclusion