China’s Outward FDI and Globalization’s Impact on CO2 Emissions: A Cross-Country Panel Data Analysis

Ahsan Akbar (), Azeem Gul (), Syed Arslan Haider (), Sareer Ahmad (), Shaoming Chen (), Shehnaz Tehseen () and Muhammad Asif ()
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Ahsan Akbar: Guangzhou City University of Technology, International Business School
Azeem Gul: National University of Modern Languages, Department of International Relations
Syed Arslan Haider: Capital University of Science and Technology, Department of Management Sciences
Sareer Ahmad: Quaid-I-Azam University, School of Economics
Shaoming Chen: Guangzhou City University of Technology, International Business School
Shehnaz Tehseen: Sunway University, Department of Management, Sunway Business School (SBS)
Muhammad Asif: Quaid-I-Azam University, School of Economics

Journal of the Knowledge Economy, 2025, vol. 16, issue 6, No 8, 17546-17569

Abstract: Abstract Carbon emissions and climate change pose significant threats to lives on Earth. Environmental degradation has become a pressing concern, endangering millions of lives. Rising carbon emissions are driving global warming and erratic climate patterns exacerbating the crises. Against the backdrop of China’s remarkable economic rise, this study investigates the relationship between Chinese outward foreign direct investment (FDI), globalization, and carbon emissions (CO2) across 102 countries from 2003 to 2018. Utilizing panel data techniques, we explore the determinants of CO2 emissions globally. Our findings indicate that energy consumption, gross domestic product (GDP), and financial development significantly increase CO2 emissions, with coefficients of 0.899, 0.083, and 0.033 respectively. These results underscore the trade-off between economic development and environmental degradation. Conversely, trade openness and China’s outward FDI negatively affect CO2 emissions. However, globalization reflects a positive linkage with carbon emissions. We advocate for trade openness to enhance investments in cleaner production and green technologies for sustainable development. Additionally, the negative linkage between China’s outward FDI and CO2 emissions suggests that Chinese companies adopt environmentally friendly technologies in their operations abroad, contributing to environmental preservation in host countries.

Keywords: Climate change; Globalization; Outwards foreign direct investment; Economic development; Carbon emissions; Environmental sustainability; China (search for similar items in EconPapers)
JEL-codes: Q2 Q4 Q5 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s13132-024-02404-y

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