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Is Pollution Haven Hypothesis valid for China's manufacture sectors? An empirical analysis based on carbon embodied in trade

Author

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  • Jie He

    () (University of Sherbrooke, GREDI)

  • Jingyan Fu

    () (Department of International Trade and Economics, Jinan University)

Abstract

Based on single-country linked Input-Output model, this paper first calculated the balance of emission embodied in trade (BEET) and pollution trade terms (PTT) for China's international trade during 1996-2004. Our results confirm China as a net emission exporter but also find China's exports to be less-polluting than China's import. Our estimation results confirm the findings of IO analysis and reveals that China has comparative advantages in less polluting labour-intensive sector. The reason China which exports principally in less-polluting sectors to have a positive BEET is because China has higher emission intensity in almost all sectors than its trade partners. Our conclusion also reveals international production division is organised without consideration of environmental performance of producers of different countries, this is the principal reason for the carbon leakage phenomenon related to international trade, while the pollution haven hypothesis plays actually a marginal role.

Suggested Citation

  • Jie He & Jingyan Fu, 2011. "Is Pollution Haven Hypothesis valid for China's manufacture sectors? An empirical analysis based on carbon embodied in trade," Cahiers de recherche 11-12, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
  • Handle: RePEc:shr:wpaper:11-12
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    File URL: http://gredi.recherche.usherbrooke.ca/wpapers/GREDI-1112.pdf
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    Keywords

    Single-country linked Input-Output model; Pollution Haven Hypothesis; Carbon leakage; Comparative advantage; BEET; Pollution terms of trade; China;

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