Research On The Impact Of FDI On Carbon Emission Intensity Of China

As a complex of the international flowing capital and technology, FDI provides a powerful impetus for many developing counties and regions, and deeply impacts on the energy and environment of host country as well. With the deepening of Chinese reform and opening up and hence the growing use of FDI, total carbon dioxide emissions also increase, and per unit of GDP carbon emissions (carbon intensity) is much higher than the world average level in the corresponding period. Such sharp increasing emissions not only force our country to face enormous pressure of international emission reduction, but also seriously restrict the sustainable development of economic society of China.In view of this, many scholars research the relationship between FDI and energy environment of the host country, some of them put forward diametrically opposed views such as the "Pollution Haven" hypothesis and the "Pollution Halo" hypothesis, and they test the relationship between FDI and the host country carbon emissions. But it is still controversial that whether FDI increases or decreases the host carbon emissions intensity. For China, the research areas of relationship between FDI and the carbon emission intensity have emerged a lot of valuable achievements, but now, most of the literature are under the hypothesis of monotonous linear about the influence of FDI on carbon emissions intensity on empirical analysis and theoretical interpretation. Thus these studies cannot give a reasonable explanation for the fact that both "pollution haven" and "pollution halo".Based on the existed deficiencies and disputes, firstly, we review the relevant literature and theoretical hypothesis, and conduct theoretical derivation of influencing channels of FDI impacting on carbon emissions intensity. Then by taking Chinese provincial panel data during 1997-2012 as study sample, we adopt dynamic panel data model, panel simultaneous equations model, the threshold of panel data model and other methods to study the effects of FDI on carbon emissions intensity. Research conclusion of this paper is mainly manifested in the following aspects.First, at the national level, FDI significantly reduced the carbon emission intensity of China. On the basis of theoretical analysis and empirical study, we verify that in Chinese FDI influences the intensity of carbon emissions through three kinds of transmission channels, which are scale effect, structure effect and technology effect. Despite the structural effect led to the rise of carbon emission intensity, but the structure effect, technology effect and overall effect of FDI on carbon emissions intensity remained negative.Second, at the regional level, the influence of FDI on carbon emissions intensity exist significant difference. The entry of FDI significantly decreases the carbon emission intensity of the eastern region of China and reduces carbon emission intensity in central region to some extent (but not significantly); in the western region, however, the entry of FDI significantly increased the carbon emission intensity.Third, the threshold model analysis shows that FDI and carbon emissions intensity is not a monotonic linear relationship. When the scale of FDI is smaller than a certain threshold value, the entry of FDI will significantly increases the intensity of carbon emissions in one region; only when increased over a certain threshold value will FDI reduce carbon emission intensity in one area.Forth, the per capital income level, intensity of environmental regulation, energy consumption structure, intensity of energy consumption, industrial structure, urbanization, technological innovation, level of human capital and financial development and other variables all play important roles in a nonlinear relationship between FDI and China’s carbon emission intensity, when these variables satisfy certain threshold condition, the effect of FDI on carbon emission intensity is more remarkable.Finally, based on theoretical analysis and practical test, we consider that the relationship between FDI and carbon emissions intensity is not always for the performance of "pollution haven" effect or "pollution halo" effect, but with a certain threshold characteristics. The smaller scale of FDI, higher carbonization of industrial structure and energy consumption structure, lower level of urbanization and technology innovation level which are the main reasons for the influence of FDI to reduce the carbon emission intensity. Therefore, we propose that we need to promote a balanced development of FDI, increase environmental regulation, enhance the capability of independent innovation to strengthen the inflow of foreign investment industrial guidance, optimize energy structure and improve energy efficiency and other aspects, in order to actively create a good external for that FDI reduce the carbon emissions intensity of China.