The effects of ICT and FDI on CO₂ emissions in China

With the rapid development of information and communication technology (ICT) and counter-cyclical expansion of foreign direct investment (FDI), most foreign-invested companies in China are highly polluting. Meanwhile, new research shows that the impact of ICT on the environment is uncertain. This study is an effort in dividing ICT into hardware and software, aiming to explore its effects on carbon (CO₂) emissions from 2003 to 2017 in 31 provinces, autonomous regions, and municipalities in China and further explore the impacts of its application to foreign-invested enterprises on environmental quality. The findings show that ICT software has a significant negative effect on CO₂ emissions, but ICT hardware and FDI have significant positive effects on CO₂ emissions. However, when ICT software and hardware are applied to foreign-invested enterprises, they can significantly improve the environmental quality. Moreover, the durative innovation of ICT software ensures environmental sustainability. A set of government measures are published to help stimulate the positive effect of ICT software on CO₂ emissions, such as taxes and fees cuts, and no-interest loans. This could provide guidelines for other countries.