Does China’s outward foreign direct investment exhibit the pollution haven effect?

This study investigates the carbon footprint of China’s Outward Foreign Direct Investment (OFDI) using an input-output (IO) model. Results show that China’s OFDI does not exhibit a pollution haven effect. Moreover, emissions are mainly generated in low-income economies but serve high-income consumption, reflecting a clear pattern of global carbon transfer. Over time, the footprint has steadily grown, with distinct drivers dominating different phases. Initially, only technological improvements mitigated emissions, while later phases saw increasing mitigation from structural optimization. These insights inform policies to align OFDI with global sustainability goals.