Trade-induced carbon-economic inequality within China: Measurement, sources, and determinants

Abstract

Carbon-economic inequality (CEI) occurs due to the unequal exchange between embodied CO2 emissions and value-added in interregional trade. How to reduce CEI has become an urgent task to realize the Sustainable Development Goals. In this study, we quantify the CEI in bilateral and regional trade in China using the embodied CO2 emission and value-added during 2012–2017. Then, we analyze the drivers of CEI changes using the multiplicative structural decomposition analysis. Finally, we measure national CEI using an extended Gini coefficient and further identify the sources of inequality using the Shapley decomposition approach. The results indicate that 1) inequalities in bilateral trade mainly occur between the three north regions (North, Northwest, and Northeast) and eastern coastal regions (Beijing–Tianjin, South coast, and Central coast), and the inequalities generally exhibit worsening trends during 2012–2017. In regional trade, the Northwest suffers the worst and widening inequalities, while the Southwest has obtained an expanded advantage. 2) the decomposition results show that coal efficiency and input structure disparities are the main factors that exacerbate CEI in bilateral trade between the three north and Beijing–Tianjin/South coast regions. Improved input structure is the leader in helping the Southwest reduce CEI in bilateral and regional trade. 3) the overall CEI continues to deteriorate, with the Gini coefficient increasing from 0.260 to 0.305 during 2012–2017, where regional gap and intra-regional inequality, coal-induced CO2 emission, and the electricity production industry are the leading causes. This exacerbated CEI calling for optimizing regional trade patterns and providing holistic solutions for sustainable development.