The Impact of Trade Liberalization on the Environment: A Case Study of Fujian Province, China

Abstract

With the rapid development of international trade and the continuous deterioration of the environment worldwide, the issue of impact of trade on energy consumption and pollution emissions has drawn widespread attention of the international community. Theoretical circles have different views on the impact of trade liberalization on the environment. The hypotheses of “Pollution Haven” and “Environmental Factor Endowment” are both representative theories. Based on the revised input-output model, this paper estimates the trade embodied carbon emissions of import and export commodities in Fujian Province from 2008 to 2016. The results show that Fujian Province is a net export region with implicit carbon emissions, and there is a significant pollution surplus in international trade. But because the embodied carbon pollution per unit of imports is greater than the embodied carbon pollution per unit of exports, the terms of trade for carbon emissions are less than 1. Therefore, the hypothesis of “Environmental Factor Endowment” can explain the environmental impact of Fujian’s trade liberalization better than the “Pollution Haven”.