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On The Pollution Content of China’s Trade: Clearing the Air?

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  • Chris Milner
  • Fangya Xu

Abstract

This study compares alternative measures of the potential and actual pollution content of China’s trade using an environmental I-O methodology. Using the conventional, potential measure adopted by other researchers, we find that China ‘saves’ on local environmental resources by exporting goods that on average embody less pollution content than imports would if they were produced locally in China. A less positive, assessment of the environmental impact of China’s trade emerges, however, if the assumption of a common technology for producing exports and imports is dropped. Using an actual pollution content methodology for measuring the pollutants embodied in the production of both exports and imports, we find that China is actually a net exporter of embodied pollutants.

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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 09/19.

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Handle: RePEc:not:notgep:09/19

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Keywords: Trade; pollution content; China;

References

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  1. Hitoshi Hayami & Masao Nakamura & Mikio Suga & Kanji Yoshioka, 1997. "Environmental Management in Japan: Applications of Input-Output Analysis to the Emission of Global Warming Gases," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 18(2), pages 195-208.
  2. Donald R. Davis & David E. Weinstein, 1998. "An Account of Global Factor Trade," Harvard Institute of Economic Research Working Papers 1849, Harvard - Institute of Economic Research.
  3. Manuel Cabral & Rod E. Falvey & Chris R. Milner, 2006. "The Skill Content of Inter- and Intra-Industry Trade: Evidence for the United Kingdom," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 142(3), pages 546-566, October.
  4. Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-46, December.
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  8. de Melo, Jaime & Grether, Jean-Marie & Mathys, Nicole Andréa, 2006. "Unravelling the World-Wide Pollution Haven Effect," CEPR Discussion Papers 5815, C.E.P.R. Discussion Papers.
  9. Leontief, Wassily, 1970. "Environmental Repercussions and the Economic Structure: An Input-Output Approach," The Review of Economics and Statistics, MIT Press, vol. 52(3), pages 262-71, August.
  10. Umed Temurshoev, 2006. "Pollution Haven Hypothesis or Factor Endowment Hypothesis: Theory and Empirical Examination for the US and China," CERGE-EI Working Papers wp292, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  11. Manuel Cabral & Rod Falvey & Chris Milner, 2009. "Does Skill Content Explain Total Trade and Intra-Industry Trade?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(5), pages 601-619, October.
  12. Machado, Giovani & Schaeffer, Roberto & Worrell, Ernst, 2001. "Energy and carbon embodied in the international trade of Brazil: an input-output approach," Ecological Economics, Elsevier, vol. 39(3), pages 409-424, December.
  13. Wyckoff, Andrew W. & Roop, Joseph M., 1994. "The embodiment of carbon in imports of manufactured products : Implications for international agreements on greenhouse gas emissions," Energy Policy, Elsevier, vol. 22(3), pages 187-194, March.
  14. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
  15. Erik Dietzenbacher & Kakali Mukhopadhyay, 2007. "An Empirical Examination of the Pollution Haven Hypothesis for India: Towards a Green Leontief Paradox?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 36(4), pages 427-449, April.
  16. Nadim Ahmad & Andrew Wyckoff, 2003. "Carbon Dioxide Emissions Embodied in International Trade of Goods," OECD Science, Technology and Industry Working Papers 2003/15, OECD Publishing.
  17. Susan Chun Zhu & Daniel Trefler, 2000. "Beyond the Algebra of Explanation: HOV for the Technology Age," American Economic Review, American Economic Association, vol. 90(2), pages 145-149, May.
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