Does Chinese foreign direct investment harm CO2 emissions in the Belt and Road Economies

China's Going Global Strategy and Belt and Road Initiative gained great attention among scholars. Moreover, it is believed that Chinese investments abroad cause serious social and environmental externalities. Hence, in this paper, we examine how China's foreign direct investments influence the carbon emissions of 35 Belt and Road Initiative countries from 2000 to 2019. To do so, we use a panel model that accounts for heterogeneity and country cross-section dependence. Our results show that while other countries' foreign direct investments have contributed to the deterioration of the environment in these countries, Chinese investments have not. This substantiates the hypothesis of the halo effect influence of China's foreign investments as opposed to other countries' investments which may seek a haven for its carbon emissions. These results highlight the importance of source and destination regulations of foreign direct investments in terms of their environmental impact and carbon emissions in the Belt and Road Initiative countries. It also provides a fresh finding on the efficacy of China's foreign investment management policies and regulations in producing the desired environmental outcome in hosting countries.

Automated summary

This paper examines the influence of China's foreign direct investments on the carbon emissions of 35 Belt and Road Initiative countries from 2000 to 2019. The results show that Chinese investments have not contributed to the deterioration of the environment in these countries, unlike investments from other countries. This highlights the importance of source and destination regulations in terms of environmental impact and carbon emissions in the Belt and Road Initiative countries.