9 The Distribution of Foreign Direct Investment in China’s Pollution-Intense Industries

After three decades of reform and opening up, China’s economy has experienced huge changes. Against the background of economic globalization, foreign direct investment (FDI) plays an important role in China’s economy. China has become one of the world’s largest FDI inflow countries, which has had an important impact on its economic development. FDI has preferred the industrial sector, which also has serious environmental pollution. This study will consider vertical and horizontal FDI location choice theory and conduct theoretical analysis concerning the FDI location choice within the industrial sectors, as well as empirical analysis to test the distribution of FDI in pollution-intense industries. Furthermore, the “Catalog of Industries for Foreign Investment” is one of China’s important industrial policies to guide foreign investment. Since being implemented in 1995, it has made five adjustments. The analysis of the distribution of FDI in the polluting industries and the impact of the change process will provide advice instructive for the government to amend the catalog.