Impact of Openness on CO2 emissions in China

The study explores the effect of trade and FDI contributed to CO2 emissions in China from 1981-2014. It finds that trade, mainly exports, and FDI had significantly led to higher emissions. Thereby it finds evidence in support of Pollution Haven Hypothesis. At the same time, it shows that imported goods have an insignificant impact on emissions. Further, Granger causality test obtains bi-directional causality between CO2 emissions, income and openness, and unidirectional causality from Energy use consumption and FDI to CO2 emissions, openness and income. Moreover, it finds the existence of the inverted-U shaped Environmental Kuznets Curve.

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