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Based on the analysis framework of the general equilibrium model of trade environment effect constructed by Copeland and Taylor, this paper explained the mechanism of the effects of coordinated development of two-way FDI on carbon emissions, and then based on the data of two-way FDI and carbon emissions in 30 provinces in China from 2003 to 2020, the paper measured the carbon emission reduction effect of the coordinated development of two-way FDI in China by using the spatial panel model and moment estimation method generated by Han and Phillips and introduced the intermediary effect model to explore its impact mechanism. Moreover, the spatial spillover effect of the spatial model was investigated by applying partial differentiation. The study showed that: ① The coordinated development of China' s two-way FDI could significantly inhibit the improvement of the country' s carbon emission level. The spatial distribution and time path dependence of high and low carbon emission clusters were significant, and the results were still valid after robustness and endogenous tests. ② Heterogeneity analysis showed that coordinated development of two-way FDI in the eastern region had the most obvious carbon emission reduction effect, followed by the central region, while the regression results of the impact of the western region on carbon emissions were not significant. That was mainly related to the highest level of coordinated development of two-way FDI in the eastern region, followed by the central region, while the western region had been in a state of extreme imbalance. ③ The test result of the impact mechanism showed that coordinated development of two-way FDI, on the one hand, reduced carbon emissions by improving the capital-labor ratio, and on the other hand, had a positive impact on carbon emissions by promoting the expansion of industrial scale and the improvement of productive technology. However, under the combined effect of structural effect, scale effect, and technological effect, it ultimately had a significant inhibitory effect on carbon emissions. ④ The spatial spillover effect analysis found that the improvement in coordinated development of two-way FDI in China' s provinces inhibited not only the carbon emissions of their own regions, but also those of neighboring regions and even the whole country. In view of the above findings, we believe that we should do a good job of coordinating the development of two-way FDI, establish a long-term mechanism of coordinated regional economic development and joint pollution prevention and control, further tap the emission reduction effect of structural effects, and encourage and guide technological progress to focus on pollution control. [ABSTRACT FROM AUTHOR]