FDI And China Energy Efficiency:The Role Of Government

Energy is the most important force pushing economic development in the past,and nowadays it still the foundation of developing countries' development.While,these huge achievements people have achieved are supported by the great depletion of energy also bring people unavoidable challenges on economics and environments.As the level of development rises,the situation of these problems has become more severe.Among them,greenhouse gas emissions and environmental pollution are considered to be the most serious negative externalities brought about by energy using.In the face of the increasingly severe environmental situation,reducing the negative effects of energy use has become a must for all countries to consider when formulating development policies.However,due to the constraints of technologies of cleaning energy,it is difficult to balance the growing development needs of countries with the call for environmental protection,forming a dilemma facing the world.Therefore,many scholars believe that improving the efficiency of energy use will be the most important way to solve environmental problems on a global scale for the foreseeable future.As the world's largest developing economy and the largest carbon emitter,China is inevitably responsible for improving energy efficiency.This study use the group-mean dynamic common correlated estimator(DCCE)regression model to investigate the effect of inward foreign direct investment(FDI)on China's energy efficiency under the governmental efficiency and environmental regulation by employing data from a panel of 30 provinces covering the periods 1998-2016.Our evidence suggests that,under the background of globalization,the inward FDI can significantly reduce China's energy intensity by enhancing energy efficiency.And FDI can also promote the convergence of energy efficiency in the central and western regions to the eastern region.The result of mechanism test indicates that the level of government efficiency and environmental regulation also show a positive relations with energy efficiency,and further,there exists a substitute effect that the influence of FDI on energy efficiency will be reduced as the increases in the level of government's efficiency and environmental regulation.This means,improving government's function in the market could be an effective way in solving China's energy problem.