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Processing trade, foreign outsourcing and carbon emissions in China

Author

Listed:
  • Chen, Quanrun
  • Löschel, Andreas
  • Pei, Jiansuo
  • Peters, Glen P.
  • Xue, Jinjun
  • Zhao, Zhongxiu

Abstract

China becomes major focus of international society for two factors: the largest trading country and the largest carbon emitter in the world, both of them are associated with China’s processing trade. Processing trade is a sort of foreign outsourcing trade which promoted China’s export as well as partially increased China’s CO2 emissions. However, China is conducting a trade reform aims at upgrade its trade structure by reducing the proportion of processing trade. This paper studies the role of processing trade in China’s export growth and CO2 emissions using an extended World Input Output Database (WIOD) with China’s micro data. In addition, we will assess the impact of China’s trade reform and economic slowdown to the structural change of export and its effect on processing trade and CO2 emissions in the future. We conclude that structural reform of export in China would likely involve other developing economies in global supply chains, and this may lead to a reduction in global emissions as those countries have lower emission intensities than China.

Suggested Citation

  • Chen, Quanrun & Löschel, Andreas & Pei, Jiansuo & Peters, Glen P. & Xue, Jinjun & Zhao, Zhongxiu, 2019. "Processing trade, foreign outsourcing and carbon emissions in China," Structural Change and Economic Dynamics, Elsevier, vol. 49(C), pages 1-12.
    • Handle: RePEc:eee:streco:v:49:y:2019:i:c:p:1-12
    DOI: 10.1016/j.strueco.2019.03.004
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    Cited by:

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    2. Dong, Kangyin & Hochman, Gal & Timilsina, Govinda R., 2020. "Do drivers of CO2 emission growth alter overtime and by the stage of economic development?," Energy Policy, Elsevier, vol. 140(C).
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    More about this item

    Keywords

    Foreign outsourcing; Carbon emissions; Global supply chains; Input-output analysis; Processing trade;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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