Empirical Research On The Environmentl Impact Of Foreign Investment In China’s Industry

On the basis of reviewing literature in both domestic and abroad, the paper employs theoretical analysis and empirical analysis to study the environmental impacts of foreign direct investment and foreign direct investment structure in China’s industry by using modern economic theory and econometric analysis. Based on analysed the situation of overall industrial sector absorbed FDI and industrial“three wastes”, we found that foreign direct investment increased the degree of deterioration of China’s environment. In the utilization of foreign direct investment, the regional distribution of FDI shows a significant imbalance phenomenon, which appears gradient feature of“east high and west low”in both foreign direct investment and environmental pollution. After the empirical research on the panel data of China’s 35 industrial sectors during the period from 2001-2007, we found the same result that foreign direct investment has significant negative impact on China’s environment in terms of the overall industrial sectors.In terms of investment structure in industrial sectors, the distribution of FDI in the three major industrial sectors showed extreme imbalance that the FDI of industial sector mainly flow into the manufacturing sector.After the empirical research on the related indicators of foreign direct investment and environmental pollution of three major sectors in 35 industries, we found that FDI of mining industry and electricity, gas and water production and supply industry put no significant effects on China’s environmental pollution, while FDI of manufacture industry has significant negative impact on our environmental pollution.After grouped the industries in accordance with the different degree of pollution and different element-intensive, we found that FDI of industrial sector mainly flow into the light pollution-intensive industries. Based on the results, on the one hand we found that FDI of the light pollution-intensive industries has significant negative effect on the environment, while FDI of the severe pollution-intensive industries has no significant effect on the environment; On the other hand, we found that FDI tends to increase investment in technology-intensive industries, and the proportion between technology-intensive and labor-intensive industries showed an increasing tendency. The empirical results showed that FDI of the technology-intensive industries produced a greater degree of negative impact on China’s environment, while FDI of the labor-intensive industries also has no significant effect on the environment.The paper considered some subjective and objective reasons which leaded FDI to produce negative effect on our environment. These reasons are the large gap between our country and developed countries, the law of gradient transfer of industry, the imperfect environmental laws in our country and so on. Therefore, we should no longer pursue economical development on the expense of the environment in utilization of FDI. We should coordinate relationship between FDI and the economical development to promote the positive effect of FDI and improve the quality of China’s environment. The article concludes with some countermeasures and suggestions.