The Impact of China's Trade Liberalisation on the Greenhouse Gas Emissions of WTO Countries

Clinton J. Levitt, Morten Saaby, Anders Sørensen

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Abstract

We examine the effects of China's trade liberalisation, post entry into the WTO, on the greenhouse-gas (GHG) emissions of its trading partners. Using complementary estimators we establish that China's liberalised trade had significant effects on the GHG emissions of its trading partners. Increased exposure to Chinese exports increased the growth of consumption-based emissions while reducing production-based emission. The increase in consumption-based emissions was larger than the decrease in production emissions. Consumption emissions increased both through a scale effect (consumption increased) and a composition effect(consumption became more emissions intensive). Decomposition analysis suggests that the link between exposure to Chinese exports and the increase consumption-based emissions is the emissions embodied in imports: The emissions embodied in imports increased and imports became more emissions intensive. The increase in imported emissions was not offset by a reduction in domestic production of emissions either in final consumption goods or exports.
Original languageEnglish
JournalChina Economic Review
Volume54
Pages (from-to)113-134
Number of pages22
ISSN1043-951X
DOIs
Publication statusPublished - Apr 2019

Bibliographical note

Published online: 1 December 2018

Keywords

  • Greenhouse gas emissions
  • International trade
  • Consumption emissions
  • Production emissions

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