Does FDI Increase Or Decrease China's Manufacturing Carbon Emissions?

Based on the data from manufacturing sectors during 2005-2014 in China,this article focuses on the impact of foreign capital inflow on environmental quality under the background of environmental regulation.In the empirical model,considering emissions of carbon dioxide as a measure of pollutants,this paper uses the penetration rate of foreign direct investment as the proxy variable of FDI and effectively measures the level of environmental regulation.Besides,the article studies the whole effects of FDI on environmental quality from the static and dynamic perspective.In the static model,firstly this paper uses the stepwise regression method to construct the fundamental regression model,then investigates the influence of FDI on emissions of carbon dioxide from the whole manufacturing sectors.What's more,as a result of the existence of industrial heterogeneity,this paper focuses on the impact of FDI on emissions of carbon dioxide under different manufacturing sectors.In order to avoid the randomness of grouping,this paper uses the non-dynamic threshold estimation and the quantile regression method to examine the relationship between FDI and emissions of carbon dioxide with different manufacturing groups.In the dynamic model,considering the time series are closely related,this paper adds a first-order lag term of dependent variable into empirical model.Meanwhile,this paper adopts the Generalized Method of Moments to deal with endogeneisty issues and tests that FDI increases or reduces the emissions of carbon dioxide with different manufacturing sectors.In the end,the paper carries out strict stability test and proves the conclusions are stable.The results show that firstly environmental effect of FDI is positive,which contributes to reducing emissions of carbon dioxide.Then the "pollution paradise hypothesis" is not established in China's manufacturing sectors.According to the data,most of the foreign direct investment flow into the clean industry,while a small number of that flow into the pollution-intensive and monopolistic industry.The research indicates that emission reduction effect in the clean industry is better than that in the pollution-intensive industry.Meanwhile,the higher the rate of foreign direct investment,the more significant the emission reduction effect of FDI.Secondly,the relationship between environmental regulation and emissions of carbon dioxide is inverted U-shaped curve.When the intensity of environmental regulation is relatively low,it contributes to increasing emission of carbon dioxide.When the level of environmental regulation crosses the inflection point,it effectively reduces the emissions of carbon dioxide in manufacturing sectors.At present,the intensity in most manufacturing sectors can't cross the inflection point,so it is necessary to increase the level of environmental regulation.Further,the threshold model test finds that the effect of FDI emission reduction is not linear,which whether can effectively function depends on the specific absorption conditions of manufacturing sectors.When the rate of R&D investment,the level of environmental regulation and the structure of energy consumption cross the threshold value,the efficiency of FDI emission reduction significantly improves.Finally,the research shows that the increase of R&D investment and capital can reduce emissions of carbon dioxide,while national capital and the structure of energy consumption in manufacturing sectors are harmful to environmental quality.