The impact of foreign direct investment (FDI) on China's manufacturing carbon emissions

• Published in: Innovation and Green Development
• Main Authors: Jinchao Yi, Yilin Hou, Zach Ziye Zhang
• Format: Article
• Language: English
• Published: Elsevier 2023-12-01
• Subjects: Chinese manufacturing industry; Foreign direct investment (FDI); Carbon neutrality; Carbon emissions
• Online Access: http://www.sciencedirect.com/science/article/pii/S2949753123000541

This paper investigates the impact of FDI on carbon emissions in China's manufacturing sector, using statistical data from 2003 to 2020 as a reference. To account for the heterogeneity of manufacturing industries, we classify them into three categories based on input factors: resource-intensive, technology-intensive, and labor-intensive. Our main findings are as follows: there is a negative correlation between FDI and CO2 emissions in manufacturing. Specifically, FDI has a positive effect on reducing carbon emissions in capital-intensive, technology-intensive, and labor-intensive manufacturing industries, with the strongest effect observed in labor-intensive industries. Foreign investment can contribute to improving energy efficiency in China's manufacturing sector, and there is potential for environmental regulation to further reduce carbon emissions in resource-intensive manufacturing. By analyzing the impact of FDI on carbon emissions in manufacturing and the role of manufacturing heterogeneity in carbon emissions, we aim to provide recommendations and strategies to help reduce the carbon footprint of manufacturing industries.