The Study On Pattern Transformation Of China’s Foreign Direct Investment Under Low-Carbon Economy

Long-term since, related theories on foreign investment in developed countries have been one of the hotspots in research of international economics. With the acceleration and deepening of economic globalization and China’s reform, more and more Chinese enterprises also began to allocate resources from the global perspective. China’s outward direct investment will be on the fast lane. However, in recent years, climate warming seriously threats the sustainable development of human. Responding to climate change, policies on low carbon constraints are appearing, which change the market environment of multinational companies to some extent and impact the original pattern, direction and scope of international capital flows. In the new situation, how to change the thinking, catch opportunity of low-carbon economy and improve the outward direct investment mode of China’s enterprises have become new ideas for construction "resource-saving and environment-friendly" society. Compared with developed countries, China obviouly lacks the vital reservation of low carbon technologies and the overall development level is relatively low. Although the clean development mechanism (CDM) brings us some spillover of technologies for energy conservation and emission reduction, the commercialization of the alienated core technology is too high and spillover from foreign direct investment still can’t solve China’s carbon emissions. In order to get ahead and take advantages under the low carbon economy and international competition, it is very important for us to be closely around clean technology innovation and to realize transformation of China’s outward investment.This paper firstly discusses about evolutional trend of multinational investment as the breakthrough point and uses relevant data of outward direct investment and carbon emissions, then briefly reviews the developing track of the multinational investment under low-carbon economy, finally expounds dynamic evolution of multinational investment from the transferring carbon pollution to investing clean technolog. Under above-mentioned background, this paper summarizes the current pattern of China’s outward direct investment.From such three perspectives as standards of carbon emission, burden of carbon tax and environmental information openness system of the host countries, this paper also investigates the coupling degree between China’s outward investment mode and low-carbon economy. The research shows that it is difficult to couple between China’s outward investment industries and climate policy environment because the industries are of high-energy consumption, high emissions and the potential risks. At the same time, this article compares our outward investment in traditional energy fields such as petroleum, natural gas with the international trend of new energy investment, also analyzes the limitation and supervision on ourward investment in traditional energy, and explores the main reasons for the impact of our current ourward investment.On the basis of analyzing the real gap between China’s outward investment mode and developed countries’under the low carbon economy, the paper constructs a mathematical analyzing framework including opportunity cost of carbon trading, preference for cleaning products, social welfare benefits and low carbon outward investment, and then further researchs the theories on transformation of China’s outward investment mode.The paper also calculates enterprises’carbon abatement cost by enterprises’opportunity cost of carbon trading and success probability of R&D on low carbon assumed low-carbon constraint condition.From heterogeneous market of preferences for product environmental quality, it comparatively analyzes the probability and extent of profit beween the multinationas which care about low-carbon technology R&D and those don’t care. Given the technology spillover rate and emission pricing in host countries, this article constructs the model to calculate extra social benefit that enterprises will have got from technology innovation for emissions reduction, which is higher than the income. Analysis shows that cost reduction will improve emissions reduction when prices are constant, and more technology innovation will result in the increase of social welfare under exogenous environmental policies.This paper analyzes the dynamic mechanism for transformation of our outward investment from propectives of and subjective impetus.From the perspective of objective impetus, supported by classical regulation-controlling theories, it predicts changing trend of international climate policies through establishing a Moldina two-stage dynamic game model. The result of game shows that the enterprises that have comparative advantages in carbon dioxide emissions will use offensively-deterred strategies to promote transformation of carbon convention model, induce regulation party to use rigid carbon convention mode, and force disadvantageous enterprises to greatly increase liabilities of emissions reduction, finally disadvantageous enterprises might loss and withdraw from the market because of the high standards. China’s international enterprises with low level of low-carbon technology are difficult to relieve pollution by autonomous R&D, and China’s development of new energy is not large enough.Under the circumstances, changing mode of China’s outward direct investment is the pratical way to deal with the increasingly-harsh international climate policies. Subjective impetus is reflected in potential gains from China’s new outward investment and the internal demand for domestic carbon emissions reductions. On one hand, China’s new outward investment can help get low-carbon technology, avoid barriers of carbon tariff and gain the potential gains from innovative compensation under low-carbon economy; On the other hand, domestic situation is not optimistic:regression analysis on China’s domestic carbon kuznets curve of carbon emissions through empirical research shows that China’s environment level measured by carbon dioxide is still to the left side of inflection point on CKC curve. The only way for solving the conflicts between economic growth in China and goals of carbon emission reduction is to exploit outward investment channel, and to develop low-carbon economy and seize industrial high-point.Finally, based on the forementioned theoretical framework and empirical results, this paper puts forward paths for China’s outward investment transformation and potential risks. The paths for China’s outward direct investment under low-carbon economy are mainly as follows:first, in the choice of investment industry, China may refer to the benchmarks of energy-security, seeking-for technology-learning and seeking-for market, so China should focus on such key technologies for low-carbon economy as R&D for new-energy technology, development and application of clean-coal technology, carbon capture and storage technology (CCS); Second, in the choice of the investment subject, we’d better choose the strategies under the low-carbon economy,in which giving priority to large enterprise groups, small and medium-sized enterprises then following up; Third, in the choice of the ways of investment,we should flexibly choose the entering pattern to develop both traditional and new low-carbon industries,greatly focusing on transnational merger. But in the changing process of outward investment patterns, China’s low-carbon industry investment will face more new risks, such as the price risk carbon,i.e. it is difficult to quantify the price’s change of carbon emissions permits;the cost risk, i.e.it is uncertain to predict the production cost of carbon emissions permits (limit) of the low-carbon investment project;the quantity risk,i.e. it is uncertain to predict the balance of carbon emissions permits or quotas produced in low-carbon investment projects. At last, the paper puts forward policy suggestions from such aspects as dovetailling carbon emissions standards in host country, promoting outward investment seeking for low-carbon technology, participating in policy-making of international climate, and controlling low-carbon outward investment.