Does China Overseas Economic and Trade cooperation Zone affect CO emissions in host countries? Evidence from a quasi-natural experimental of countries along the "Belt and Road".

China Overseas Economic and Trade Cooperation Zone (COCZs) which as a platform for China's foreign investment and trade has a potential impact on CO emissions, while strengthening bilateral investment and trade between China and the host countries. Since most of the COCZs are located in countries along the "Belt and Road," the purpose of this paper is to investigate the impact of COCZs on CO emissions of the countries along the "Belt and Road" and the mechanism of this impact. We constructed a panel data of 63 countries along the "Belt and Road" from 2000 to 2020, and conducted an empirical study using the difference-in-difference (DID) model. Our research result show that COCZs can significantly increase the CO emissions of the countries along the "Belt and Road." Then, we conduct a series of robustness tests and endogeneity test on the estimation results of the baseline model, and the results of the tests all support the conclusion reached by the baseline model. Our heterogeneity analysis reveals that the effect of COCZs on CO emissions is more significant in Asian countries with lower national income or industrialization and higher country risk. Finally, we analyzed industrial value added and energy depletion as possible impact mechanisms, the results of mechanism model shows that COCZs can increase the industrial value added and then significantly increase CO emissions, but energy depletion was not an efficient mechanism. Our paper provides a new insight into the impact of bilateral economic and trade cooperation zones on CO emissions in host countries.