Global value chains participation and carbon emissions embodied in exports of China: Perspective of firm heterogeneity

Abstract

This paper studies the impact of global value chains (GVCs) participation on carbon emissions embodied in exports (EEE) of China during 2005–2016, and analyses firm heterogeneity from the perspective of firm ownership and trade patterns; Then, industries are classified based on factor intensity and technology level, and the industrial heterogeneity of different firms is analyzed; Finally, through counterfactual analysis, this paper evaluates EEE under four anti-globalization scenarios. The empirical study shows that with the increase of GVCs position, EEE first increases and then decreases, showing an inverted U-shaped distribution. From the perspective of firm ownership, the relationship between GVCs position of domestic firms and EEE is inverted U-shaped distribution, while GVCs position of multinational enterprises (MNEs) is positively correlated with EEE. The relationship of capital-intensive and technology-intensive domestic firms, high-tech and medium-tech manufacturing domestic firms are also inverted U-shaped distribution. The positive correlation of MNEs is reflected in the low-tech manufacturing industries. From the perspective of trade patterns, with the increase of GVCs position, EEE of processing trade firms presents an inverted U-shaped distribution, while it is not significant for general trade firms. The inverted U-shaped relationship between GVCs position in capital-intensive industries and EEE are confirmed in all firms. Under anti-globalization scenarios of 50% backflow, EEE would increase. Under scenarios of 100% backflow, EEE would reduce. The results above provide useful references to achieve carbon emission reduction targets.