Abstract
China needs to address the environmental costs to participate in global value chains (GVCs) more sustainably. Digitalization presents a potential solution to overcome information barriers and improve energy efficiency in global production networks. However, the impact of digital technology on GVC-related carbon intensity has not been systematically studied. This paper utilizes embedded multi-regional input-output (EMRIO) tables to analyze the relationship between digital technology and GVC-related carbon intensity in China's 28 regions and 11 manufacturing sectors. The study calculates three indexes: digital technology development, the openness degree of digital technology, and the carbon intensity related to GVCs for the years 2002, 2007, 2010, and 2012. Through a fixed-effect model, the paper examines how digital technology can reduce domestic embodied carbon intensity related to GVCs in China. The findings indicate that: (1) digital technology development has a negative impact on GVC-related domestic embodied carbon intensity; (2) digital technology development indirectly reduces domestic embodied carbon intensity by decreasing energy consumption intensity and increasing foreign services' input intensity; (3) enhancing the openness of digital technology in China can strengthen the reduction effect of digital technology development on the environmental cost related to GVCs.
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