The Impact of Foreign Direct Investment on Carbon Emissions

Reducing carbon emissions and creating a green, low-carbon economy have emerged as key strategic initiatives for China's green economic transformation against the backdrop of the "dual carbon" agenda. This study uses the two-way fixed effect model to empirically examine the influence of foreign direct investment (FDI) on carbon emissions, using panel data from 30 Chinese provinces between 2000 and 2021. The findings demonstrate that foreign direct investment significantly reduces carbon emissions. The results are still robust after replacing the explained variable, eliminating the municipalities in the sample and considering the lag period. Based on the research of regional heterogeneity, foreign direct investment (FDI) in the western area has a major influence in driving up carbon emissions. Finally, the article offers related recommendations based on the previously mentioned results.