Abstract
We use input-output analysis and Levinson's structural decomposition method to measure China's CO2 emissions under the no-trade hypothesis, to calculate how international trade affects China's emissions. We also analyze the driving factors of the difference between hypothetical no-trade CO2 emissions and actual emissions and discuss the existence of "Pollution Haven Hypothesis" (PHH) in China. The results show that (1) from 2000 to 2017, the hypothetical no-trade CO2 emissions are 2.43-14.67% lower than actual emissions. The scale effect is the main cause of this difference, while the composition effect fluctuates and has little impact. (2) Although exports make other economies' CO2 emissions transfer to China, imports also help avoid China's emissions from some carbon-intensive sectors. (3) International trade has little impact on the cleanliness of China's industry composition. The no-trade industry composition is slightly cleaner than the actual one before 2010, after which trade improves the cleanliness of industry composition to a small extent. PHH is invalid for China in recent years, and results for most developing countries do not support PHH. (4) The relationship between no-trade effects and income per capita for all the economies does not also support PHH. Most economies reduce emissions, and their industry compositions are cleaner because of trade, regardless of their development degree. Trade will not severely influence China's future emission reduction, and improving the cleanliness of carbon-intensive sectors should be paid more attention to.
Highlights
China’s CO2 emissions account for almost 30% of global emissions and this is a great challenge for global environment
China's no-trade emissions during the calculation period are much lower than the actual emissions
This result suggests that China's CO2 emissions would be significantly reduced under the no-trade hypothesis
Summary
China’s CO2 emissions account for almost 30% of global emissions and this is a great challenge for global environment. China’s carbon emissions are the highest in the world, but statistical data shows that the growth of emissions has slowed since 2016. International trade is the main link of different countries’ economies and significantly affects countries’ emission patterns and global emission patterns. Because energy use is embodied more and more in trade products, CO2 emissions embodied in trade are increasing, and most main economies’ carbon reliance on trade products has been higher in recent years (Andrew, Davis, and Peters 2013). One quarter of global carbon emissions are related to export activities, and emissions embodied in products transfer among different countries (Davis and Caldeira 2010). One region’s emission reduction may lead to other regions’ emission increasing, defined as “carbon leakage”
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