The impact of foreign direct investment on China's carbon emission efficiency through energy intensity and low-carbon city pilot policy

Abstract

The rapid growth of foreign direct investment (FDI) has had a significant impact on rapid economic development and environmental pollution in China. Nonetheless, the underlying mechanism and empirical evidence of FDI impact on carbon emission efficiency have not been systematically explored. Therefore, this study investigates the impact of FDI on carbon emission efficiency via energy intensity, as well as the moderating role of the Low-Carbon City Pilot Policy (LCCP) in the process. We found that: (1) During the study sample period, the average carbon emission efficiency tends to rise, however, there remains a gap between the optimal carbon emission efficiency; (2) FDI is one of the key factors that inhibit the improvement of carbon emission efficiency, with a non-linear relationship between them; (3) FDI indirectly suppresses the improvement of carbon emission efficiency by promoting energy intensity. Nevertheless, the implementation of LCCP has a positive effect on carbon emission efficiency; (4) The implementation of LCCP has improved the negative impact of FDI on carbon emission efficiency, nonetheless, it cannot significantly influence the process that FDI affects carbon emission efficiency through energy intensity. Thus, we propose improvement measures from three aspects, i.e., increasing the introduction of foreign capital, adjusting the energy consumption structure, and expanding the scope of low-carbon cities.

Retesting the Innovation Motivation Effect of the Low-Carbon City Pilot Policy in China: Evidence from Supply Chains

“…The results of the group tests presented in Table 5 Panel A indicate that the pilot policy's impact on suppliers' innovation investment is concentrated mainly in highcarbon emission groups. This is consistent with previous research [6,48,49], which suggests that firms operating in high-carbon sectors are the primary targets of environmental regulations.…”

“…Studies suggest the low-carbon city pilot policy primarily impacts firms in high-carbon sectors [6,48,49]. Similarly, based on the spillover effects through the supply chain, this study believes that low-carbon city pilot policies implemented in the largest customer cities will significantly affect suppliers' innovation investments in high-carbon emission groups.…”

Impact of China’s Low-Carbon City Pilot Policies on Enterprise Energy Efficiency

“…In particular, Pan et al (2019) argue for an inverted U-shaped relationship between facilitation and inhibition [15]; Wu et al (2020) argue that this non-linear relationship is a U-shaped relationship that inhibits and then promotes [16]; and Wang et al (2017) support the non-linear theory of inverted U-shaped relationships and find a single threshold effect [17]. On the one hand, research on the low-carbon city pilot policy has focused on the impact of the policy on urban carbon and pollution emissions [18][19][20][21]; on the other hand, the difference-in-differences model is the primary method used by scholars to test the economic effects of low-carbon city pilot policies in terms of foreign direct investment [22], strategic emerging industries [23], technological innovation [24], industrial structure optimization [25], and high-quality development [26].…”

Synergistic impacts of clean energy demonstration policies on pollution and carbon reduction

“…These varying conclusions highlight the need for an unbiased assessment of the impact of CEDP policies as a practical tool. Furthermore, insights from research on other energy policies such as new energy demonstration cities (Guo et al, 2024), low-carbon pilot cities (Wang and Shao, 2023), and clean heating programs (Song et al, 2023) offer valuable references for this study.…”