Impact of FDI and R&D on China's industrial CO2 emissions reduction and trend prediction

Abstract

In this paper, we investigated the impact of foreign direct investment (FDI) and research as well as development(R&D) on industrial carbon dioxide (CO2) emissions reduction. Firstly, a Panel-Corrected Standard Error (PCSE)model was established based on Chinese provincial panel data during period of 2000–2017. Secondly, a GreyModel (GM) was constructed to predict the growth trend of CO2 emissions, FDI and R&D in China from 2018 to2030. It was deduced that: (1) FDI do bring negative effects on industrial CO2 emissions at the national level.From the perspective of regions, the coefficients of the eastern, central and western regions are all negativelycorrelated with CO2 emissions and pass the test of 1% significance level except the northeastern China. (2) Interms of R&D, it showed significantly improvement on CO2 emissions at the national and regional levels.Moreover, the efficiency of industrial CO2 emissions was improved by R&D with a rate of 27.2%, while therelated value was increased by FDI with a rate of merely 4.3% at the national level. (3) According to the resultsof GM (1,1), China is expected to achieve zero growth of CO2 emissions by 2030. The growth rate of FDIgradually decreased to less than 5%, while the R&D input will always be at an annual growth rate of more than5% for a long period of time in the future.