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

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 Grey Model (GM) was constructed to predict the growth trend of CO2 emissions, FDI and R&D in China from 2018 to 2030. 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 negatively correlated with CO2 emissions and pass the WA of 1% significance level except the northeastern China. (2) In terms 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 the related value was increased by FDI with a rate of merely 4.3% at the national level. (3) According to the results of GM (1,1), China is expected to achieve zero growth of CO2 emissions by 2030. The growth rate of FDI gradually decreased to less than 5%, while the R&D input will always be at an annual growth rate of more than 5% for a long period of time in the future.