The Effects of China-EU Trade on CO 2 Emissions

Abstract

Production for international trade has played an important role in driving the rapid increase of Chinese CO2 emissions. This paper uses input-output analysis to quantitatively estimate the effect of the bilateral trade between China and its present largest trading partner, the European Union (EU), on both national and global CO2 emissions. The results show that under the bilateral trade, China’s emissions from 2002 to 2008 increased by 2458 MMT (6.64%), and the EU’s emissions decreased by 539 MMT (1.81%). From a global perspective, the trade led to an increase of 1919 MMT CO2 in the world’s total emissions. The trading pattern is not dominated by pollution haven effect but by the comparative advantages in factor endowments. It is suggested that a consumer responsibility-based accounting system of national CO2 inventory should be introduced in replace of the present producer responsibility-based one. In order to achieve cost efficiency in emissions reduction in the new accounting system, more CDM programs could be established.