The clean development mechanism and technology transfer to China, Questioni di Economia e Finanza (Occasional Papers) Banca d'Italia (Eurosistema) 129/2012

In this study we analyse the role of the Clean Development Mechanism (CDM) established by the Kyoto Protocol in channeling foreign technology to China. The descriptive analysis investigates the sources and the determinants of foreign technology transfer based on the examination of 1,355 registered projects. As key features, we show the prominence of German firms as technology providers and the absence of a strong relationship between technology suppliers and credit buyers. We also discuss the role of leading Chinese and foreign consultants and of major credit buyers. The econometric analysis finds that project size and cost, project location, credit buyers’ and consultants’ characteristics, as well as technology diffusion are all relevant factors in determining the probability of having a foreign supplier of technology in the respective project.