It is clearly stated in the 19th people’s congress that we should make the environmental protection as our national policy. Therefore, it is of great importance to study this issue. This article is going to consider 30 provinces of China as the cross-section, and utilize the data sample from 2006 to 2015 of these cross-sections to formulate a Spatial Panel Data Durbin Model to analyze the effect of FDI. By using these data, this article creates a comprehensive environmental pollution index with the help of entropy. The result indicates that the effect of FDI on environment has a non-linear and spatial spillover characteristic. Before reaching the critical value, FDI has a negative effect on environment; however, with the accumulation of FDI, it will create a significant positive effect on the environment.
