China's foreign direct investments: Do they promote domestic green technology?

This study systematically analyses the nonlinear relationship between China's outward foreign direct investment (OFDI) and reverse green technological progress (RGTP) using fixed effects (FE) model based on panel data for 31 Chinese provinces from 2001 to 2020. We find that the link between China's OFDI and RGTP is an inverted U-shaped curve. In addition, environmental regulation and technology gaps all reduce the height of the inverted U-shaped inflection point. Environmental regulation prolongs the "climb" stage while technology gaps compress the "climb" stage of the inverted U-curve relationship significantly. This result is verified in further robustness tests. The four transmission mechanisms of China's OFDI on RGTP play a positive role: these findings may help policymakers to design more flexible and effective OFDI policies.