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The Impact of Urbanization on CO2 Emissions in China: The Key Role of Foreign Direct Investment

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  • Chi-Chuan Lee
  • Boxu Zhou
  • Tsung-Yu Yang
  • Chin-Hsien Yu
  • Jinsong Zhao

Abstract

By adopting the dynamic panel threshold approach, this study assesses how foreign direct investment (FDI) shapes the causality between urbanization and CO2 emissions in China from 1996–2018. The results suggest that a rise in the pace of urbanization increases CO2 emissions, but this harmful effect becomes weaker after achieving a certain level of foreign capital. We also find that the more developed the technology, financial and government sectors, the more it can promote urbanization to reduce CO2 emissions. These results offer policy implications for China’s urban planning and environmental policy.

Suggested Citation

  • Chi-Chuan Lee & Boxu Zhou & Tsung-Yu Yang & Chin-Hsien Yu & Jinsong Zhao, 2023. "The Impact of Urbanization on CO2 Emissions in China: The Key Role of Foreign Direct Investment," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 59(2), pages 451-462, January.
    • Handle: RePEc:mes:emfitr:v:59:y:2023:i:2:p:451-462
    DOI: 10.1080/1540496X.2022.2106843
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    Cited by:

    1. Xi Liu & Yugang He & Renhong Wu, 2024. "Revolutionizing Environmental Sustainability: The Role of Renewable Energy Consumption and Environmental Technologies in OECD Countries," Energies, MDPI, vol. 17(2), pages 1-21, January.
    2. Ying Yan & Ridwan Lanre Ibrahim & Mamdouh Abdulaziz Saleh Al-Faryan & David Mautin Oke, 2023. "Embracing Eco-Digitalization and Green Finance Policies for Sustainable Environment: Do the Engagements of Multinational Corporations Make or Mar the Target for Selected MENA Countries?," Sustainability, MDPI, vol. 15(15), pages 1-18, August.
    3. Xu, Ye & Wen, Shuang & Tao, Chang-Qi, 2023. "Impact of environmental tax on pollution control: A sustainable development perspective," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 89-106.
    4. Raufhon Salahodjaev & Bekhzod Djalilov & Islomjon Kobiljonov & Shukhrat Otajonov & Nargiza Kasimova, 2023. "Industrialization and CO2 Emissions: Accounting for the role of Renewable Energy in OIC Member States," International Journal of Energy Economics and Policy, Econjournals, vol. 13(5), pages 37-43, September.
    5. Li, Ge & Wen, Huwei, 2023. "The low-carbon effect of pursuing the honor of civilization? A quasi-experiment in Chinese cities," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 343-357.
    6. Hong, Hui & Zhang, Cheng, 2023. "Bitcoin trading, economic growth, energy use, and CO2 emissions: An advanced panel study of emerging market economies," International Review of Economics & Finance, Elsevier, vol. 87(C), pages 519-531.
    7. Li, Yaya & Cobbinah, Joana & Abban, Olivier Joseph & Veglianti, Eleonora, 2023. "Does green manufacturing technology innovation decrease energy intensity for sustainable development?," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1010-1025.

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