The third-country effects of CO2 emissions in BRI countries: A verification on China's impacts by spatial Durbin panel data model

Abstract

Since the WTO accession in 2001, China's outward foreign direct investment (OFDI) and foreign trade have been leaping forward, especially reflected as the "One Belt & One Road" initiative (BRI), proposed in 2013, which has been its largest public product for international community thus far. On that basis, this study focuses on the third-country effects of carbon dioxide (CO2) emissions in BRI related countries, and delves into its spatial interaction from rising impacts of China's global economic cooperation activities, with the economic & political distance from China as institutional factors, using spatial econometric method in a panel data of 60 BRI countries from 2007 to 2016. Accordingly, the empirical results first significantly reveal the existence of spatial autocorrelation for CO2 emissions per capita in BRI countries by Moran's I test. Furthermore, according to the main estimated results of the spatial Durbin model with spatial fixed effects, China' s OFDI and imports to BRI countries exert third-country effects or spatial spillover effects; from the perspective of sustainability and emission reduction during BRI, China is required to launch more economic cooperation in emerging and low carbon industries with limited political claims. In response, BRI countries are supposed to develop its high tech and low carbon complementary industries with surrounding countries, so as to keep the CO2 emissions at a low level.