Research on relationship between merchandise trade and carbon emission in China

With economic globalization and trade integration, the production and consumption activities of one country may cause environmental changes in other nations. Since China becomes the main trading country and “processing factory” of the world, commodity trade has shown greater impact on domestic carbon emission. By means of input-output approach, the carbon emission embodied in exports of 21 trading and industrial departments is estimated. An input-output biased estimate model is then established to propose factor decomposition on embodied CO2 conversion. The result shows that a large proportion of domestic CO2 emission is induced by exports. Such conclusion can be made from the factor decomposition on two periods that technical effect can largely decrease CO2 emission embodied in exports. The negative effect of trading structure has turned into positive influence; in other words, present structural optimization only exhibits limited effect on carbon emission reduction. There still exists tremendous room for structural improvement. And corresponding suggestions are also presented in this paper.