[Pollution and Carbon Reduction Effect of OFDI in China and Its Mechanism]

Under the "Going out" strategy and the Belt and Road Initiatives, the trade in goods and services and flow of production factors between China and the rest of the world have become more frequent, and the total amount of outward foreign direct investment (OFDI) is considerable and growing significantly. Therefore, along with the extensive economic growth and the substantial growth of foreign investment, the environmental impact of OFDI has become noteworthy. Here, through theoretical analysis and logical deduction, three possible pathways of the impact of OFDI in China on the environment were presented as hypotheses, which included the industrial structure, the technological innovation progress, and the economic-scale expansion. Using Chinese provincial data from 2004 to 2019, an environmental load index including main environmental pollutant emissions and carbon emissions was constructed. Taking this as the dependent variable, an intermediary effect method was constructed to analyze the home pollution and carbon reduction effect and the influence mechanism of OFDI in China. The results showed that ① OFDI in China reduced the environmental load, and each 1% increase in OFDI reduced the environmental load by 0.051%-0.076%. ② The OFDI in China reduced the environmental load by advancing the industrial structure and technological innovation progress, and a 1% increase in OFDI resulted in a 0.060% and 0.006% reduction in environmental load through their indirect effects, respectively, whereas OFDI increased the environmental load by 0.009% through the path of economic-scale expansion. The contributions of leading environmental load changes mediated by advancing industrial structure, technological innovation progress, and economic-scale expansion were 65.9%-84.5%, 6.6%-8.5%, and -12.7%- -9.9%, respectively, and the contribution of OFDI directly driving the environmental load to change was 19.7%-37.4%. Based on this, policy recommendations, including promoting Chinese enterprises and capital going abroad, encouraging relatively disadvantaged domestic industries to explore foreign markets, strengthening reverse technology spillover effects, and forming a sustainable low-carbon development mode, have been proposed.