A Study On The Environmental Effects Of Foreign Direct Investment In China

Since China’s reform and opening up,how to promote capital formation and thus economic growth has been a key strategy for the country.As foreign direct investment is an important part of capital formation in developing countries,it is imperative to efficiently absorb and utilise foreign investment to promote economic and technological development."In 2022,the National Development and Reform Commission(NDRC)and the Ministry of Commerce published the latest FDI industry catalogue,which is designed to direct more FDI to advanced manufacturing,high technology and energy conservation and environmental protection,as well as to the central,western and northeastern regions.In addition,since 2020,China has proposed a long-term plan to achieve "carbon peaking" by 2030 and "carbon neutrality" by 2060.On the one hand,this reflects China’s commitment to addressing global climate change,and on the other hand,the implementation of the carbon reduction policy is based on the country’s desire to promote a new development concept and achieve high-quality economic development.While scholars have focused on how to attract foreign investment to promote economic growth while protecting the domestic production environment and achieving sustainable economic growth,the relationship between foreign investment and regional environmental effects has not been conclusively established.Based on this,this paper uses panel data from 30 Chinese provinces and cities from 2005 to 2020,and uses bilateral stochastic frontier analysis(SFA)to conduct an empirical test.In terms of the selection of indicators,carbon productivity reflects the economic benefits produced per unit of CO2 emissions,and the rate of improvement of this indicator can reasonably measure the effectiveness and development potential of a country or region’s low-carbon economy.The empirical analysis based on the econometric model leads to the following conclusions:in the case of China as a whole,the positive impact of FDI on environmental pollution is stronger than the negative one,and the extent of this effect is cumulative,with the positive effect becoming more pronounced as time passes.For different provinces in China,the direction and intensity of the final environmental impact of FDI varies from region to region due to the different levels of economic development.This is reflected in the fact that the better the level of economic development,the more pronounced the positive effect,and the lower the level of economic development,the more serious the environmental pollution.