Analysis On The Impact Of China’s Outward Foreign Direct Investment On Carbon Emissions Of Countries Along The "The Belt And Road"

In the context of economic globalization,China has become a major country of foreign direct investment.Following the “Silk Road Economic Belt” and “21st Century Maritime Silk Road” initiatives proposed by President Xi in 2013,the national government departments jointly issued <the Guiding Opinions on Promoting the Construction of the Green “The Belt and Road” >in 2017,which clearly pointed out the need to strengthen the environmental management of foreign investment to promote the development of the green financial system,Therefore,it is of practical significance to explore the impact of China’s foreign direct investment on carbon emissions of countries along the “The Belt and Road”.Firstly,this paper analyzes the impact mechanism of China’s OFDI on carbon emissions of countries along the “The Belt and Road” from a theoretical perspective.Referring to Grossman and Krueger(2015),China’s OFDI can indirectly affect carbon emissions by changing the economic scale,industrial structure and technological level of the host country,which is mainly reflected in three aspects:(1)scale effect.(1)Scale effect: FDI can promote the increase of local per capita income,thereby changing the consumption level and environmental awareness of residents,and ultimately affect domestic carbon emissions;(2)Structural effect: different countries will take different industries as the leading industries for production activities.On the one hand,OFDI will expand the production scale of the host country’s leading industries,on the other hand,it will change the layout of its domestic industrial structure,and ultimately achieve the goal of affecting carbon emissions;(3)Technology effect,while capital flows,high and new technologies and advanced knowledge from the home country will also flow into the host country.Local enterprises can absorb the high-quality part to improve their overall technology level,which eventually lead to the improvement of production utilization rate or the substitution of green technology,leading to changes in carbon emissions.In addition,this paper also analyzes the mechanism of the institutional distance and the division of labor status of the global value chain,and holds that they can affect carbon emissions by influencing the entry mode of OFDI and the industry of inflow respectively,and may have certain threshold effect characteristics.Secondly,this paper uses STIRPAT model and combines Kaya identity to build a theoretical model.Based on the relevant data of 42 countries along the “The Belt and Road” from 2003 to 2020 and the OFDI statistics of China’s OFDI Statistical Bulletin,To conduct an empirical study on the impact of China’s OFDI on carbon emissions in countries along the “The Belt and Road”.The specific research content and results are divided into four parts:(1)The impact of China’s OFDI on the carbon emissions of countries along the “The Belt and Road” has been significantly negative in the benchmark regression,and the Kuznets curve is confirmed by the regression results after adding the square term of economic scale.(2)By replacing the core explanatory variables,lagging core explanatory variables,eliminating the explained variables and part of the sample size of the core explanatory variables,the particularity,time delay and possible outliers of the proxy indicators were excluded respectively for the robustness test.The results show that the empirical study has certain robustness.At the same time,the lagging second term of the core explanatory variable was used as an instrumental variable to conduct two-stage least squares regression,which passed the endogeneity test.(3)In the heterogeneity test,samples were divided according to the criteria of region,outward direct investment with a positive and negative gradient,and whether China is a member of the Organization for Economic Cooperation and Development,and regression analysis was conducted.It is found that China’s outward direct investment has different impacts on carbon emissions in countries along the “The Belt and Road”.When China makes OFDI to Asian countries,Central and Eastern European countries,relatively high-income countries,and OECD member countries,the host country’s carbon emissions will be significantly reduced,while the direct investment in CIS countries will lead to a significant increase in local carbon emissions.(4)In the mechanism testing link,China’s OFDI was regressed with the interaction items of economic scale,industrial structure and technology level respectively.It was found that the technological effect had an inhibitory effect on carbon emissions and the structural effect would promote carbon emissions.In addition,the threshold model was used for regression analysis with the distance of political system,distance of economic system and division of labor status of global value chain as threshold variables respectively.The results show that when the distance of political system and economic system exceeds the threshold value,China’s OFDI will have a more significant negative impact on carbon emissions.The possible reason is that the increase of the institutional distance will enable more Chinese enterprises to choose the mode of cross-border merger of foreign direct investment,leading to the reduction of carbon emissions,and the division of labor in the global value chain of the host country will also have a more significant inhibitory effect when it exceeds the threshold.This paper argues that capital inflows is caused by high value-added industries to promote industrial structure upgrade.Finally,based on the above results,this paper puts forward targeted suggestions for promoting the green construction of “The Belt and Road” and China’s economic development:(1)Continue to increase OFDI in countries along the “The Belt and Road”without damaging the environment of the host country.(2)China should continue to adjust the industrial distribution of OFDI industries and upgrade the investment structure.(3)Guide transnational enterprises to fully understand the institutional environment of the host country,and appropriately encourage OFDI in the form of cross-border mergers and acquisitions.(4)Lead the development of high value-added industries in the regions along the “The Belt and Road” and improve the division of labor in the global value chain.