Reducing carbon inequality has become a central challenge under the carbon-neutrality agenda. However, the increasing role of multinational enterprises (MNEs) in shaping regional inequality remains unclear. Using newly developed Inter-City Input-Output Tables that distinguish MNEs activities, this paper quantifies MNEs-induced carbon footprints and value added across Chinese cities, traces the interregional transfers they generate, and evaluates their effects on inter-city carbon inequality. Results show that MNEs induce substantial but spatially uneven emissions and economic gains. The counterfactual simulations indicate that MNEs significantly mitigate the escalating inter-city carbon inequality during 2002-2017. Structural decomposition analysis reveals that this equalizing effect is driven primarily by technology spillovers and cleaner supply-chain structures, whereas scale effects tend to exacerbate disparities. These findings deepen our understanding of how foreign investment shapes interregional carbon inequality and highlight the potential for strategically leveraging MNEs activity to promote greener and more regionally balanced development in large emerging economies.

Publication:

SUSTAINABLE PRODUCTION AND CONSUMPTION

http://dx.doi.org/10.1016/j.spc.2026.03.001

Author:

Kang Lin

School of Management, Xi'an Jiaotong University, Xi'an, 710049, China

Kailan Tian

State Key Laboratory of Mathematical Sciences, Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Beijing, 100190, China

School of Economics and Management, University of Chinese Academy of Sciences, Beijing, 100190, China

MOE Social Science Laboratory of Digital Economic Forecasts and Policy Simulation at UCAS, Beijing, 100190, China

Correspondence to: K. Tian, State Key Laboratory of Mathematical Sciences, Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Beijing, 100190, China.

E-mail addresses: k.tian@amss.ac.cn

Yuli Shan

School of Geography, Earth and Environmental Sciences, University of Birmingham, Birmingham, B15 2TT, UK

Corresponding author

E-mail addresses:y.shan@bham.ac.uk