Abstract: It has gained the widespread concerns from experts and scholars whether the implementation of the “Belt and Road” policy will bring pollution transfer, and the fragile ecological environment determines that pollution-intensive foreign direct investment (FDI) should be rejected in arid and semiarid areas in northwest China. Different from the previous studies which paid attention to the pollution transfer effect caused by FDI from the national and provincial level or the eastern, central and western regions of China, in this study, the gray correlation and different-in-different (DID) method were innovatively used to study whether there is a pollution transfer effect of FDI in cities in arid and semiarid areas in northwest China under implementing the “Belt and Road” policy. Moreover, the gray correlation analysis was used to compare the correlation between FDI and pollution in arid and semiarid areas before and after implementing the “Belt and Road” policy. The results revealed that the coefficient of association decreased after implementing the “Belt and Road” policy, so the FDI did not bring the pollution transfer effect on cities in arid and semiarid regions in northwest China. After implementing the policy, the FDI in the semiarid areas increased by 107.41% in average, but only by 3.41% in the arid areas. Moreover, the DID method was used to further explore whether there was a significant difference of pollutant emission between these two kinds of regions. It was found that there was no significant difference in pollutant emission between the arid and semiarid urban areas before and after implementing the policy. Therefore, we further verified that FDI did not bring about pollutant transfer effect under implementing the “Belt and Road” policy. In addition to the effect of the policy, pollutant emission from the arid and semiarid regions is also related to many other socio-economic factors. The population growth and the development of economy and transportation aggravate the urban pollutant emission; the development of tertiary industry reduces the pollutant emission; education can reduce the urban pollutant emission by improving people's awareness of green environmental protection and promoting the development of green technology. Therefore, in implementing the policy in the arid and semiarid regions in northwest China, more attention should be paid to the harmonious development of economy, society and environment in the regions where the ecologic environment is relatively fragile. For these regions, the government should promote the development of tertiary industry, increase the investment in education and promote the scientific and technological innovation so as to achieve a human-nature harmonious development. The “Belt and Road” policy has provided a good opportunity for the development in the arid and semiarid regions in northwest China. The increase of FDI has not resulted in pollution there but achieved a harmonious development of economy and environment.

Key words:  city; water pollution, air pollution, FDI, pollution transfer effect of FDI, the “Belt and Road” Initiative, arid and semi-arid areas