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By adopting the dynamic panel threshold approach, this study assesses how foreign direct investment (FDI) shapes the causality between urbanization and CO 2  emissions in China from 1996–2018. The results suggest that a rise in the pace of urbanization increases CO 2  emissions, but this harmful effect becomes weaker after achieving a certain level of foreign capital. We also find that the more developed the technology, financial and government sectors, the more it can promote urbanization to reduce CO 2  emissions. These results offer policy implications for China’s urban planning and environmental policy.

The Impact of Urbanization on CO 2 Emissions in China: The Key Role of Foreign Direct Investment