China’s Outward Foreign Direct Investment and the Environmental Performance of the “Belt and Road Initiative” Countries

Li Gao () and Fuyou Li
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Li Gao: School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710061, China
Fuyou Li: School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710061, China

Sustainability, 2023, vol. 15, issue 15, 1-17

Abstract: Since the launch of the “Belt and Road Initiative” (BRI) in 2013, China’s outward foreign direct investment (OFDI) has grown rapidly. Moreover, the environmental protection issues introduced by these investment behaviors to BRI countries have attracted widespread attention from the international community. With the unbalanced panel data of 66 BRI countries from 2006 to 2020, this paper studied the impacts of China’s OFDI on the environmental performance of BRI countries from a systemic and partial perspective. We found that from a systemic perspective, China’s OFDI is conducive to the improvement of the comprehensive environmental performance of countries along the “Belt and Road”. From a partial perspective, the environmental performance influences of China’s OFDI in countries along the “Belt and Road” are threefold: (1) China’s OFDI can help mitigate climate change; (2) China’s OFDI improves wastewater treatment capacity; and (3) China’s OFDI has no significant impact on air quality. Therefore, China’s OFDI needs to continue its efforts to promote and improve the environmental performance of BRI countries to achieve their sustainable development goals. Some BRI developing countries should gradually change their extensive economic growth models; reduce their share of high energy-consuming, high-pollution, and inefficient industries in the national economy; and expand the proportion of their environmentally friendly industries while refraining from improving environmental performance by imposing high environmental pollution taxes.

Keywords: China; OFDI; environmental performance index; BRI countries; panel analysis (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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