Research on the impact of environmental information disclosure on foreign direct investment based on the “new normal” in China

Abstract

In May 2014, China mentioned the concept of the “new normal” for the first time. The “new normal” economy promotes growth through development, replacing GDP growth with the all-round development of society and attaching greater importance to the sustainable development of society. China is a large recipient of foreign direct investment (FDI). Under the background of the “new normal”, it is worth exploring the impact of increased environmental supervision in China on FDI. This paper introduces the Pollution Information Transparency Index, which has been published in China since 2008, to quantify environmental information disclosure. The study also collects data about the Pollution Information Transparency Index and the FDI of all provinces and cities in China from 2014 to 2018. Finally, a regression analysis and a difference-in-difference model are constructed to analyze the impact of environmental information disclosure on FDI. The results show that, under the “new normal” economy, highly-disclosed environmental information has a significant impact on FDI inflow in China. The impact is different in terms of population density, investment in pollution control, and GDP in different regions. This paper ovides new ideas for environmental governance and the further utilization of foreign investment under the “new normal”.