How Foreign Direct Investment Influences Carbon Emissions, Based on the Empirical Analysis of Chinese Urban Data

The overabundance of carbon emissions is widely considered as a serious world problem. This paper focuses on analyzing the influence of economic factors on carbon emissions. Based on the traditional STIRPAT model, in terms of the “pollution haven hypothesis” and “pollution halo hypothesis”, this paper employs the dynamic panel data model to explore the impact of economic elements such as economic growth, population, foreign direct investment and others on carbon emissions. Based on our research, China’s urban carbon emissions do not follow the inverted U-shaped hypothesis of the traditional EKC curve theory and presents an inverted N-type. Moreover, current foreign direct investment increases the carbon emissions of Chinese cities due to the “implicit trade carbon”. However, during the lagging period of one phase, it significantly reduced urban carbon emissions. In addition, the lag of one period of carbon emissions statistically led to carbon emissions at the current stage. According to the empirical analysis results, this paper proposes some reasonable improvements for carbon dioxide emission reduction, which have certain reference values for other developing countries facing similar carbon emission reduction challenges.