The environmental impact of Chinese overseas construction and engineering projects: evidence from CO2 emissions

Pranaya J B Rana, Zhining Hu and Linus Nyiwul

Journal of Chinese Economic and Business Studies, 2025, vol. 23, issue 4, 673-710

Abstract: This paper investigates the dynamic impact of Chinese overseas construction and engineering projects on the environmental pollution of host countries, using CO2 emissions as a proxy. Employing a panel vector autoregression (PVAR) approach, we address endogeneity and explore heterogeneity across countries by income level. The full sample analyses show mixed and often insignificant effects. However, disaggregated results reveal that in low-income countries, these projects cause environmental degradation, temporary GDP gains, short-lived FDI inflows, and weak governance improvements, reflecting limited regulatory capacity. In high-income countries, environmental impacts are minimal, with strong institutional oversight. Our findings offer valuable insights for designing stronger environmental governance in developing economies.

Date: 2025
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DOI: 10.1080/14765284.2025.2549236

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