China’s Foreign Trade and Climate Change: A Case Study of CO2 Emissions

Jul 6, 2026

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Globalization of trade reshapes environmental impacts by enabling consumers to shift pollution to other countries. This study quantifies carbon dioxide (CO2) embodied in China’s foreign trade over 1997–2007 using an input–output approach. Results indicate that 10.03–26.54% of China’s annual CO2 emissions stem from producing export goods for foreign consumers, while import-embodied CO2 is comparatively small. The rest of the world avoids emitting 150.18 Mt CO2 in 1997, rising to 593 Mt in 2007. Net additional global emissions linked to China’s exports reach 4894 Mt, decomposed into scale, composition, and technical effects, with policy implications provided.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages7

Reading Time18 min

Introduction

Background on China’s emissions and trade

Theoretical links between trade and pollution

Methods and key findings

Energy Policy 38 (2010) 350–356 Contents lists available at ScienceDirect Energy Policy journal [homepage: www.elsevier.com/locate/enpol](homepage: www.elsevier.com/locate/enpol) China’s foreign trade and climate change: A case study of CO2 emissions Yan Yunfeng a, 􀀂 , Yang Laikeb,1 a Business School, East China Normal University, 500 Dongchuan Rd., Shanghai 200241, China b Center of International Finance and Risk Management, East China Normal University, 500 Dongchuan Rd., Shanghai 200241, China a r t i c l e i n f o Article history: Received 24 March 2009 Accepted 21 September 2009 Available online 21 October 2009 Keywords: Carbon dioxide (CO2) emission embodied in trade The economic input–output-life cycle assessment (EIO-LCA) Structural decomposition analysis (SDA) a b s t r a c t 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 150.18Mt 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. & 2009 Elsevier Ltd. All rights reserved. 1. Introduction China’s economic growth has been described as an economic miracle. However, the rapid economic growth has come at the expense of the environment. China’s CO2 emissions increased from 1460 million tonnes (Mt) in 1980 to 6499Mt in 2007.Within a very short period of time, from 2002 to 2007, China’s CO2 emissions doubled and it is now believed that China is the world’s biggest emitter of CO2. The International Energy Agency (IEA) estimates China’s CO2 emissions will continue to increase to 11.4Gt in 2030 in the scenario of BAU (Business As Usual). China faces increasing international pressure to curb its CO2 emissions. Ma Kai, minister of the National Development and Reform Commission (NDRC), argues with the following points:ﬁrst, China has low per-capita emissions; second, China contributes a small amount to cumulative emissions; third, limits on China’s CO2 emissions would hamper economic development; and ﬁnally, the production of exports should be responsible for China’s CO2 emissions, because increase in pollution in China is partly a result of the shift of manufacturing. Considering labor costs, marketing, environmental regulation and other factors, a number of ﬁrms in developed countries transferred their pollution- 􀀂 Corresponding author. Tel.: +862154343146. E-mail addresses: [yyf007@126.com](yyf007@126.com) (Y.F. Yan), [lkyang@bs.ecnu.edu.cn](lkyang@bs.ecnu.edu.cn) (L.K. Yang). 1 Tel.: +862154345058. intensive industry to China. In 2008, China’s foreign trade amounted to 2561.63 billion US dollars, surpassing Germany to become the world’s second-largest trading nation, and it is likely to exceed the United States in 2010, becoming the world’s largest trading nation. China has gained many beneﬁts from its enormous trade surplus, but it is at the expense

FAQs

What does the paper study about international trade and climate change?

The paper examines CO2 emissions embodied in China’s foreign trade and how trade links to climate change through carbon leakage and production shifts across countries.

Which approach is used to estimate CO2 embodied in trade from 1997–2007?

An input–output approach is applied to estimate the CO2 embodied in exports and imports across 1997–2007.

How do exports and imports differ in their carbon impact in the results?

CO2 produced during the manufacture of export goods accounts for a sizable share of China’s annual emissions, while CO2 embodied in imports remains much smaller. The results also estimate that the rest of the world avoids additional emissions by importing from China.

Jul 6, 2026

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