Role of FDI and energy intensity in mitigating the environmental pollution in the Chinese steel industry: does technological innovation makes a difference?

To accomplish China's sustainable growth, it is critical to identify the primary factors affecting environmental quality in the steel industry. In this positioning, foreign direct investment (FDI), energy intensity, and technological innovation have emerged as strong pillars of the steel industry. However, there are growing concerns of carbon emission from this industry which is still debatable. In this context, this study measures the effect of FDI, energy intensity, and technology innovation on environmental quality in the steel industry from 28 provinces of China. The study uses the provincial data for China over the period 2000-2018. In addition to examining unit root properties and cointegration, this study employed Augmented Mean Group regression for estimating long-run relationships among study variables. The findings reveal the negative effect of FDI and technology innovation on environmental quality. These findings indicate that FDI and technology innovation have shaped the energy intensity in the steel industry. The positive coefficient value of energy intensity shows that innovations for environmental conservation and energy usage are minimal and did not perform an integral part in lowering carbon emissions. These findings are important in formulating successful emission reduction policies after controlling the effects of urbanization and economic growth for the Chinese steel sector.