The Impact Of China’s Environmental Regulation On The Regional Distribution Of Foreign Direct Investment

Since the reform and opening up,the influx of FDI has played an important role in promoting China’s economic development.However,the regional distribution of FDI is not balanced in China,of which the eastern region accounts for a relatively high proportion.With the rise of China’s economy,environmental pollution has become increasingly serious,and the government has gradually established and improved environmental regulations.The enhancement of environmental regulation and the differentiation of regional environmental regulation will affect the profitability of FDI enterprises,and then affect the location decision of FDI enterprises.It is of great practical significance to scientifically formulate environmental regulations,guide the rational distribution of FDI among regions,and make it better serve the development of national economy.Based on the systematic review of relevant theories and references,this paper examines the evolution of China’s environmental regulation and FDI regional distribution,discusses the impact mechanism of environmental regulation on FDI distribution,and tests the impact of environmental regulation on FDI regional distribution through empirical research,so as to provide decision-making reference for the government to formulate environmental regulation scientifically and promote the rational distribution of FDI.This paper analyzes the evolution of China’s environmental regulation and FDI regional distribution.China’s environmental regulation has experienced three stages:the initial establishment of environmental pollution prevention and control policies,the comprehensive prevention and control of environmental pollution,and the multiple co governance of environmental pollution.Environmental regulation tools can be divided into three types:command control,market incentive,and public participation.The intensity of environmental regulation in the eastern region is higher than that in the central and western regions.China’s FDI scale is on the rise as a whole.The eastern region has the highest level of FDI distribution,and shows a trend of transferring to the central and western regions.FDI is mainly distributed in Guangdong,Jiangsu,Zhejiang,Shanghai,Shandong and other coastal provinces,and has shown a trend of transferring to inland provinces.This article discusses the impact mechanism of environmental regulations on the regional distribution of FDI.On the one hand,with the strengthening of environmental regulations,it will promote the agglomeration and distribution of FDI in the region through innovation compensation effects such as technological innovation,product innovation and process innovation;on the other hand,it will also be due to pollution costs,production costs,access costs,etc.The cost increase effect promotes the decentralized distribution of FDI.When environmental regulations are weak,the cost increase effect is not significant,or the innovation compensation effect offsets the cost increase effect to a certain extent.Environmental regulations will promote the agglomeration and distribution of FDI in the region,and when the intensity of environmental regulations exceeds a certain limit,innovation compensation The effect cannot offset the cost increase effect,and environmental regulations will inhibit the agglomeration and distribution in the FDI area,so that the two have an inverted U-shaped relationship.Based on the data of 30 provinces in China from 2004 to 2017,this paper constructs a threshold panel regression model with the intensity of environmental regulations as the threshold variable and the core variable,takes the actual use of FDI in each region as the explained variable,and comprehensively considers the level and foundation of economic development The impact of related control variables such as facilities and labor costs,and the different effects of different intensities of environmental regulations on the distribution of FDI are studied from the national and regional levels.The threshold panel regression results show that the impact of China’s environmental regulations on the distribution of FDI has a significant single threshold effect,showing an inverted U-shaped relationship as a whole.When the intensity of environmental regulations is lower than the threshold value,as the intensity of environmental regulations increases,environmental regulations have a positive impact on the agglomeration and distribution of FDI;when environmental regulations cross the threshold,the impact of environmental regulations on the distribution of FDI changes and will be suppressed Agglomeration and distribution of FDI.From a regional perspective,the impact of different regional environmental regulations on the distribution of FDI is different.The single threshold effect in the eastern and western regions is significant,and the central region failed the threshold effect test during the study period.Based on theoretical and empirical analysis,this article puts forward the following policy recommendations:reasonably set the intensity of environmental regulations to increase the level of regional agglomeration and distribution of FDI;formulate differentiated environmental regulations to speed up the upgrading of the regional investment structure;focus on the long-term nature of environmental policies and encourage FDI to rely on innovation and technology Progress to achieve cleaner production.