China’s Path to Sustainable Development through Going Global Strategy

This study examines the impact of reverse technology spillovers from China’s OFDI on carbon emission intensity in the country. We argue that the effectiveness of reverse spillovers in promoting energy efficiency and clean technologies depends on the strength of the home country’s absorptive capacity, which includes factors that facilitate the identification, adoption, and diffusion of foreign technologies within the domestic context. Furthermore, the mediating role of absorptive capacity is influenced by the degree of economic alignment between the home country and its OFDI destination countries, insofar as foreign technologies that are better suited to the domestic capabilities can be more easily exploited by domestic producers. Using provincial data from 2004 to 2022, our findings reveal a significant and negative indirect effect of reverse technology spillovers on carbon intensity through absorptive capacity. Additionally, the study finds that OFDI from countries more economically aligned with China’s development status enhances the effectiveness of absorptive capacity in mediating the impact of reverse technology spillovers on reducing carbon intensity. This suggests that policies aimed at improving China’s absorptive capacity, coupled with investments targeted to countries aligned with its evolving capabilities, are effective strategies to maximize the potential for China’s global integration to support sustainable development.