The Impact of FDI on Urban PM_2.5 Pollution in China: The Mediating Effect of Industrial Structure Transformation

• Main Authors: Taowu Pei, Lei Gao, Chao Yang, Chang Xu, Yu Tian, Weiming Song
• Format: Article
• Language: English
• Published: MDPI AG 2021-08-01
• Series: International Journal of Environmental Research and Public Health
• Subjects: FDI; PM_2.5; upgrading of industrial structure; rationalization of industrial structure
• Online Access: https://www.mdpi.com/1660-4601/18/17/9107

With the rapid growth of foreign direct investment (FDI), PM_2.5 pollution in Chinese cities is increasing. Based on panel data for 271 Chinese cities from 2003 to 2016, this paper uses the dynamic spatial fixed-effects Durbin model to analyze the correlation between FDI and PM_2.5 pollution and the effect of FDI on urban PM_2.5 concentrations, as mediated by industrial structure transformation, which is clarified using Stata/SE 16.0. The results showed that PM_2.5 pollution in China has significant spatial spillover effects, and the pollution haven hypothesis is applicable to Chinese cities. The industrial structure partially mediates the relationship between FDI and PM_2.5. This paper proposes that local governments should promote the market-oriented reform of FDI to create a more convenient, legalized, and international environment for FDI and innovate the governance philosophy of only reducing the existing emissions. A top-level design and sound market supervision system of PM_2.5 control are also needed.