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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. Lee, Chi-Chuan & Song, Hepeng & An, Jiafu, 2024. "The impact of green finance on energy transition: Does climate risk matter?," Energy Economics, Elsevier, vol. 129(C).
    2. 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.
    3. Murshed, Muntasir, 2024. "The role of Fintech financing in correcting ecological problems caused by mineral resources: Testing the novel ecological deficit hypothesis," Resources Policy, Elsevier, vol. 88(C).
    4. 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.
    5. Zhang, HongWei & Ben, Fang & Qin, Meng, 2024. "Mineral resources, tourism, human capital, and carbon neutrality: A path towards balanced and sustainable development," Resources Policy, Elsevier, vol. 90(C).
    6. Lee, Chi-Chuan & Song, Hepeng & Lee, Chien-Chiang, 2023. "Assessing the effect of green finance on energy inequality in China via household-level analysis," Energy Economics, Elsevier, vol. 128(C).
    7. 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.
    8. Chishti, Muhammad Zubair & Arfaoui, Nadia & Cheong, Calvin W.H., 2023. "Exploring the time-varying asymmetric effects of environmental regulation policies and human capital on sustainable development efficiency: A province level evidence from China," Energy Economics, Elsevier, vol. 126(C).
    9. Maxwell Chukwudi Udeagha & Marthinus Christoffel Breitenbach, 2024. "Investigating Financial Development and Its Direct and Indirect Environmental Effects in South Africa: Fresh Policy Insights," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(2), pages 428-495, April.
    10. 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.
    11. 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.
    12. Feng, Haiyan & Li, Yan, 2024. "The role of fintech, natural resources, environmental taxes and urbanization on environmental sustainability: Evidence from the novel panel data approaches," Resources Policy, Elsevier, vol. 92(C).
    13. 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.
    14. 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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