The Impact of Urbanization on CO2 Emissions in China: The Key Role of Foreign Direct Investment

By adopting the dynamic panel threshold approach, this study assesses how foreign direct investment (FDI) shapes the causality between urbanization and CO 2 emissions in China from 1996-2018. The results suggest that a rise in the pace of urbanization increases CO 2 emissions, but this harmful effect becomes weaker after achieving a certain level of foreign capital. We also find that the more developed the technology, financial and government sectors, the more it can promote urbanization to reduce CO 2 emissions. These results offer policy implications for China's urban planning and environmental policy.