Carbon emission effect of foreign investment and its influence on carbon peaking

doi:10.12006/j.issn.1673-1719.2023.183

Abstract

Abstract:

While large-scale foreign investment is seen as a participant in China’s economic growth miracle, it is also seen as an important contributor to China’s carbon emissions. In 2020, China made a solemn commitment to the world: strive to peak carbon dioxide emissions before 2030 and achieve carbon neutrality before 2060. In the context of the continuous compression of the negative list of foreign investment access, how will the further introduction of foreign investment affect the realization of the “dual carbon” goal? In order to answer this question, based on the carbon dioxide emissions data at the provincial and industry level from 2001 to 2019, combined with the Catalogue of Industries for Foreign Investment Guidance and the Catalogue of Industries with Advantages for Foreign Investment in Central and Western Regions, a DID model was constructed to study the carbon emission effect, mechanism of action, heterogeneity and the relationship between foreign investment access policy and carbon peaking. The results show that the foreign investment access policy significantly reduces the level of carbon emission, and the policy mainly achieves carbon emission reduction by promoting the clean energy structure. Foreign investment access policy has no significant impact on carbon emissions in the eastern region, significantly inhibits carbon emissions in the central and northern regions, and significantly promotes carbon emissions in the western and southern regions. Compared with high-carbon emission industries, this policy has a more prominent effect on carbon emission reduction in non-high-carbon emission industries. Further analysis shows that there is an “inverted U-shaped” curve relationship between the scale of foreign investment and carbon emissions, and most industries in most provinces in China have not yet crossed the inflection point. Therefore, it is suggested that the government in the future further relax the foreign investment access policy, continue to promote the optimization of clean energy structure, and formulate differentiated “negative lists” according to regional and industry heterogeneity to promote the realization of the “dual carbon” goal.

Key words: Foreign capital access policy, Carbon emission, DID model, Provinces and industries, “Inverted U-shaped” curve

CAO Xiang, JIANG Lu, YU Yang. Carbon emission effect of foreign investment and its influence on carbon peaking[J]. Climate Change Research, 2024, 20(2): 205-219.

Figures/Tables 16

Fig. 1 Impact mechanisms of the foreign capital access policy on carbon emissions

Fig. 2 Foreign investment access and carbon emission trends

Table 1 Descriptive summary

Fig. 3 Test of parallel trend assumption

Table 2 Results of baseline regression and robust regression

Fig. 4 Placebo test based on random sampling

Table 3 Goodman-Bacon decomposition

Table 4 Instrumental variable regression results

Table 5 Mechanism test

Table 6 Heterogeneity analysis of east, middle and west regions of China

Table 7 Heterogeneity analysis in north and south regions of China

Fig. 5 Comparison of fixed assets growth rate in north and south regions of China

Fig. 6 Comparison of the number of R&D projects in north and south regions of China

Table 8 Industry heterogeneity

Table 9 Inverted U-curve test

Table 10 Individuals crossing the inflection point

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