Does the Coordinated Development of Two-Way FDI Reduce CO2 Emissions by Technological Progress Evidence from China

This study applies a spatial Durbin model and a panel threshold model to assess the impact of coordinated development of two-way FDI (TWFDI) on CO2 emissions, using panel data from 30 Chinese provinces spanning 2003 to 2023. The results indicate that TWFDI significantly reduces CO2 emissions in both local and neighbouring regions, particularly in light-emission provinces and after environmental policy revision. Mechanism analysis suggests that the TWFDI mitigates CO2 emissions by promoting technological progress. Threshold effects further reveal that its impact varies with FDI synergy and technological levels. These findings provide valuable insights for policymakers striving for sustainable development.