The Impact of Foreign Direct Investment on China's Carbon Emission Pollution from the Perspective of Environmental Regulation

Since the 21st century, the inflow of foreign direct investment (FDI) in China has increased year by year. In 2020, China surpassed the United States for the first time to become the largest foreign capital inflow country. The inflow of FDI is accompanied by the transfer of pollution, technology and structure, and has had a complex impact on China's carbon emissions. So, does FDI inflow increase China's environmental load of carbon emissions? Will tightening environmental regulations change this effect? To answer the above questions, this paper uses environmental regulation as a moderator variable, and uses the Spatial Durbin Model to analyze the impact of FDI on China's carbon emissions based on provincial panel data from 1998 to 2017. The study found that: FDI inflows within a certain scale show a "pollution halo" effect in China as a whole, that is, carbon emissions are reduced, and when the inflection point is reached, it will show the opposite effect of increasing emissions. FDI inflows have spillover effects on carbon emissions in adjacent areas, greater than the direct effect on carbon emissions in the local region, shown as inverted U-shaped and U-shaped respectively. The adjustment effect of environmental regulation is mainly reflected in the counter-acting force, which buffers the sharp increase or decrease of carbon emissions.