China's foreign trade and climate change: A case study of CO2 emissions

The globalization of trade has numerous environmental implications. Trade creates a mechanism for consumers to shift environmental pollution associated with their consumption to other countries. Carbon leakage exerts great influences on international trade and economy. Applying an input–output approach, the paper estimates the amount of carbon dioxide (CO₂) embodied in China's foreign trade during 1997–2007. It is found that 10.03–26.54% of China's annual CO₂ emissions are produced during the manufacture of export goods destined for foreign consumers, while the CO₂ emissions embodied in China's imports accounted for only 4.40% (1997) and 9.05% (2007) of that. We also estimate that the rest of world avoided emitting 150.18 Mt CO₂ in 1997, increasing to 593 Mt in 2007, as a result of importing goods from China, rather than manufacturing the same type and quantity of goods domestically. During 1997–2007, the net “additional” global CO₂ emissions resulting from China's exports were 4894 Mt. Then, the paper divides the trade-embodied emissions into scale, composition and technical effect. It was found that scale and composition effect increased the CO₂ emissions embodied in trade while the technical effect offset a small part of them. Finally, its mechanism and policy implications are presented.