Economic development and carbon dioxide emissions in China: Provincial panel data analysis

This paper investigates the driving forces, emission trends and reduction potential of China's carbon dioxide (CO₂) emissions based on a provincial panel data set covering the years 1995 to 2009. A series of static and dynamic panel data models are estimated, and then an optimal forecasting model selected by out-of-sample criteria is used to forecast the emission trend and reduction potential up to 2020. The estimation results show that economic development, technology progress and industry structure are the most important factors affecting China's CO₂ emissions, while the impacts of energy consumption structure, trade openness and urbanization level are negligible. The inverted U-shaped relationship between per capita CO₂ emissions and economic development level is not strongly supported by the estimation results. The impact of capital adjustment speed is significant. Scenario simulations further show that per capita and aggregate CO₂ emissions of China will increase continuously up to 2020 under any of the three scenarios developed in this study, but the reduction potential is large.     

CO2 Emissions Embodied in China＇s Foreign Trade： An Investigation from the Perspective of Global Vertical Specialization

In light of the growth in vertically specialized in global trade, the present paper uses input output tables from the World Input-Output Database to construct an environmental multi regional input-output model to calculate the CO2 emissions embodied in China＇s international trade during 1995-2009. The advantage of this model lies in its incorporation of the re exported CO2 emissions component embodied in trade and its ability to differentiate domestic sourced CO2 emissions from foreign-sourced CO2 emissions in trade. The results show that carbon emissions embodied in both China＇s exports and imports increased significantly during 1995-2009. One important reason for this is that the re-exported carbon emissions embodied in China＇s imported intermediate inputs increased substantially during this period. Our research reveals that accelerating the transformation of trade pattern and upgrading processing trade should be emphasized in the formulation of policy to prompt CO 2 emissions abatement in China.     

Carbon emissions,trade liberalization,and the Japan–ASEAN interaction: A group-wise examination

As in any modern economy, trade is central to the progress of the economy in the Association of Southeast Asian Countries (ASEAN) region, but environmental degradation occurs with globalization. Using panel data from the period 1970–2006, this study examines the interaction between trade and the environment in terms of carbon emissions for the group of ASEAN countries. The results demonstrate that CO₂ emissions display an inverted-S shape in the region. In general, exports as a percentage of the gross domestic product (GDP) are main contributors to carbon emissions in the developed, developing and late-developing ASEAN countries. The study found no evidence for the Foreign Direct Investment’s (FDI) deteriorating impact on environmental quality. Moreover, Japan’s imports from the region do not cause pollution while China’s imports stimulate the pollution per capita.     

What can Indonesia learn from China's industrial energy saving programs?

Even though Indonesia's CO₂ emissions are dominated by deforestation while China's are dominated by industry, Indonesia has much to learn from China's industrial energy saving programs. To begin with, it is only a matter of time before Indonesia's emissions from fossil fuels overtake those from deforestation. Given the long technological lock-in effects of energy systems and industries, Indonesia needs to think now about how it will tackle this problem. There are other reasons for believing that Indonesia might learn something from China – the CO₂ intensities of GDP, of industry and of cement production have been rising in Indonesia, while they are falling in China. China's better intensity performance is due to policies that Indonesia would do well to follow – adopting a technological catch-up industrial development strategy; raising energy prices to scarcity values; liberalising domestic markets and opening the economy to trade and investment; and mounting a massive energy saving program.     

Estimation of China＇s Embodied CO2 Emissions during 2000-2009

The problem of CO₂ embodied in international trade has attracted increasing attention in China. To analyze this issue, the present paper directly calculates emission factors for 15 industries in 2002, 2005 and 2007. We then examine a consumption‐based system and a single‐region input–output model to estimate China's embodied emissions during 2000–2009. Our results show that, when a consumption‐based system is adopted, China's emissions are lower than those reported by some international organizations. The rapid growth in China's exports is a key determinant of China's rising total emissions. All countries should strengthen their cooperation in improving their current greenhouse gas inventories. Furthermore, China needs to encourage trade in low‐carbon products and technology.     

Population dynamics and economic growth in China

This paper focuses on two major elements of China's population dynamics—the rising proportion of workers in the population and the shift of rural workers from agriculture into industry and services—in a provincial-level analysis of per capita income and productivity growth during the last three decades. We measure the ‘mechanical’ contributions of these dynamics to per capita income as revealed by growth decompositions, before assessing the determinants of per capita income and productivity growth in a series of regressions that include the growth of the working-age to total population (WAP) ratio and a measure of sectoral employment change. Our results indicate that sectoral change has made a significant positive contribution to both per capita income growth and aggregate productivity growth, stemming from its positive impact on agricultural productivity growth—as predicted by the Lewisian dual economy model. However, the negative impact of sectoral change on productivity growth in the industrial and service sectors, combined with the negative impact of growth of the WAP ratio on both per capita income and aggregate productivity growth, suggests that the benefits of China's population dynamics during the last three decades have been overstated.     

Economic Benefits and Environmental Costs of China's Exports: A Comparison with the USA Based on Network Analysis

This paper decomposes economic benefits (value‐added) and environmental costs (CO₂) of exports according to their sources, and maps the global value network (GVN) and the global emissions network (GEN) for China's exports during 1995–2009 from national, sectoral and national–sectoral perspectives. A comparison is conducted between China and the USA. National GVN and GEN show that shares of value‐added and CO₂ emissions from China in its GVN and GEN both decreased first then increased after 2006, while shares from the USA in its GVN and GEN generally decreased. Sectoral GVN and GEN show that among China's exports, “electrical and optical equipment” and “electricity, gas and water supply” were, respectively, the sectors that obtained the most value‐added and emitted the most CO₂. National–sectoral GVN and GEN for China exhibited reciprocal and disassortative patterns, and in‐strengths and out‐strengths of GVN and GEN for China's exports were mainly captured by several domestic country–sector pairs.     

Barriers to labor mobility and international trade: The case of China

This paper quantitatively evaluates the potential impacts of removing China's Hukou system on the world economy. By denying migrant workers the right to health benefits and housing, China's Household Registration (Hukou) system presents a significant distortion to the Chinese labor market that discourages the reallocation of its labor from agriculture to non-agriculture. I find that the elimination of Hukou could increase China's real income per capita by about 4.7%. Moreover, although for most countries the impact of removing Hukou is modest (less than 1% changes in real income per capita), substantial changes in real income could take place for China's small neighboring economies. For example, the decreases in real GDP per capita are 2.7%, 3.2%, and 4.1% for Bangladesh, Sri Lanka, and Vietnam, while Thailand stands to enjoy a 3.8% increase in its income.     

The Role of TTIP on the Environment

The current study empirically investigates and shows that, on average, the possible implementation of the Transatlantic Trade and Investment Partnership (TTIP) would generally help in the fight against global warming. In particular, the study finds that a 1% increase in the bilateral trade between the United States and the typical EU member would reduce annual per capita emissions of CO₂ and GHGs in the typical TTIP member by about 2.7% and 2.4%, respectively. However, results also show that TTIP may increase annual per capita emissions of GHGs in the United States by about 2.5% per year. These results stand because the factor endowment hypothesis and the pollution haven hypothesis based on population density variations appear to dominate the pollution haven hypothesis based on national income differences.     

Analysis on CO2 Emissions Transferred from Developed Economies to China through Trade

Based on a global input–output model, this paper investigates the CO₂ emission transfer between China and developed economies through trade. The results show that approximately 15–23 percent of China's production‐based emissions during 1995–2009 were induced by the production of goods and services satisfying final demand in developed economies. Decomposition of emission transfers shows that trade of intermediate products played a significant role in emission transfer from developed economies to China. Most developed economies have consumption‐based emission responsibilities that are higher than their production‐based responsibilities, whereas China's consumption‐based responsibility is significantly lower than its production‐based responsibility. We argue that a fair and efficient carbon accounting approach should take CO emission transfers from developed economies to developing economies into consideration. It is important that China and its developed trade partners cooperate in reducing emission transfers.     

Regional allocation of carbon dioxide abatement in China

This paper aims to identify which provinces will be allocated more (less) of a carbon dioxide reduction burden within China's pledge to reduce its carbon intensity at the Copenhagen conference. Using an extended Slacks-Based Measure (SBM) model incorporating an undesirable output, the CO₂ reduction potential and marginal abatement costs are estimated for 29 provinces over the period 1995–2007. The CO₂ Abatement Capacity Index (ACI) is constructed based on weighted equity and efficiency indexes. We find that there exists a large gap in potential reduction capability and marginal abatement cost among the eastern, middle and western regions. The eastern region has the least inefficient emission and the highest marginal abatement cost, while the western region has the largest potential reduction capability and the lowest marginal cost faced in reducing CO₂ emissions. The difference in potential CO₂ abatement among the provinces results from different industry structures, energy compositions and degrees of the openness of trade. The ACI ranking and the final allocation among provinces depend on the policy-makers' preferences regarding equity and efficiency.     

How Does Trade Openness Affect Regional Demographic Transitions? Evidence from China's Provincial Panel Data

This paper investigates the effect of trade openness and other variables on the demographic transition in China using the instrumental variables regression method based on provincial panel data for the period between 1981 and 2013. The results indicate that trade openness is one of the determinants of China's demographic transition and has two distinct effects: (i) an income effect that accelerated the demographic transition by increasing per capita income; and (ii) a human capital effect that suppressed the demographic transition by reducing human capital accumulation. The effects of trade on demographic transition vary across different regions. This study identifies the important determinants of demographic transition in China's regions, and has rich policy implications for demographic transition and the upgrading of trade structure.     

Has China Crowded out Foreign Direct Investment from Its Developing East Asian Neighbors？

This paper applies a gravity model to investigate the determinants of foreign direct investment (FDI) in East Asia. Economic fundamentals, such as market size, per capita income and country risk indicators, economic and cultural ties, exchange rate volatilities and information asymmetry are found to be important determinants for FDI. Globally, the inward FDI among high-income OECD economies declined significantly on average over the period of 1990-2003, whereas the inward FDI of the high-income OECD economies in emerging market economies gained substantially. In the East Asian region, the ASEAN-4 (Indonesia, Malaysia, the Philippines and Thailand) received above-average inward FDI from the high-income OECD economies after controlling for their economic fundamentals. By contrast, China's FDI from the high-income OECD economies is below average relative to its economic fundamentals. Therefore, it is difficult to establish that China has crowded out FDI from its developing ASEAN neighbors.     

Remedy or Poison: Impacts of China's Outward Direct Investment on Its Exports

During the past decade, China's outward direct investment (ODI) and exports have experienced rapid growth, drawing increasing attention to the relationship between them. Using the gravity model based on panel data on China's ODI and trade to 174 countries and regions during 2003–2012, the present paper investigates the impacts of China's ODI on exports. We find that China's ODI to a host country significantly promotes China's trade with that economy: a 10‐percent increase in ODI stock can lead to a 2.14‐percent increase in exports, a 2.07‐percent increase in imports and a 2.87‐percent increase in net exports. The scale of the host country's economy, its infrastructure and its distance to China also have significant impacts on China's exports. Therefore, growth in ODI will facilitate China's trade and integration into the global economy, and enhance industrial upgrading in China by transferring the low‐end industries abroad.     

A Bite of China: Food consumption and carbon emission from 1992 to 2007

In conjunction with the rapid rise in household food expenditures per capita, China's food consumption has increased greatly. At the same time, dietary patterns have changed dramatically, as between 1992 and 2007 China underwent a transition to a more animal-based westernized diet. This rise in food consumption and shift in dietary structure may contribute substantially to climate change. In this paper, an input-output model is used to explore the food-related carbon emissions of Chinese urban households in 1992 and 2007. The results indicate that the physical volume of and economic expenditures on food consumption have increased by 20.7% and 35.9%, respectively. However, food-related carbon emissions per capita in 2007 had decreased nearly 21% compared to emissions in 1992. Based on parametric estimates of environmental Engel Curves and the Oaxaca-Blinder decomposition, the variation in household income may lead to a hypothetical carbon emissions increase of 1.694 tons. However, the improvement in energy use efficiency had offset the impact from income growth and dietary transition and led to the drop in China's food-related carbon emissions from 1992 to 2007.     

International Trade and R&D Investment: Evidence from Chinese Manufacturing Firms

A current concern for China's long‐term growth prospect is whether China can become an innovative economy and achieve industrial upgrading to compensate for the gradually declining competitiveness resulting from low‐cost labor. The present study examines this issue by exploring how trade participation impacts on the R&D investment of manufacturing firms through various channels. Merging China's Annual Manufacturing Survey Dataset and the Chinese Customs Dataset allows us to study such a relationship at the individual firm level. The empirical results suggest that channels such as geographical diversification of export markets, share of imports from high‐income countries, average unit value of imports, number of intermediate goods and capital goods imports, and the trade regime are significant factors that influence firm‐level R&D investment. The study discusses the policy implications of the empirical findings in relation to industrial and trade policies that may be potentially beneficial for China's transition towards an innovative economy.     

Pollution abatement costs and technical changes under different environmental regulations

Balancing economic growth and environmental protection is a global issue that requires both scientific and economic consideration. In this study, we employed a joint production model that accounted for both favorable and unfavorable outputs to calculate the changes in pollution abatement costs (PACs) and the decomposition of SO₂ emissions in China's industrial sector from 2001– to 2015. Command-and-control and tradable permit environmental regulation scenarios were specified to assess PACs and changes in these costs associated with changes in technology, input, and unfavorable output production. Our empirical results show that the PACs increased by 0.06% and 0.34% under command-and-control and tradable permit scenarios, respectively. Further analyses of these changes indicated that regulated technology grew faster than unregulated under both scenarios; overall, command-and-control regulations were more conducive to green technological innovations. Both types of environmental regulation reduced industrial SO₂ emissions, and the difference between them was minimal. Under the two scenarios, the pollution emissions intensity decreased. Moreover, because the tradable permit policy improved favorable output production via the optimal allocation of resources, the intensity of pollution emissions was significantly lower. As there were advantages to both regulatory options, their balanced application is vital in the short-run. In the long-term, measures should be taken to ensure the full trading of SO₂ emission rights. The focus of environmental policies should gradually shift to an emissions trading system to achieve the balanced development of China's environment and economy.     

Is China's FDI coming at the expense of other countries?

We analyze how China's emergence as a destination for foreign direct investment is affecting the ability of other countries to attract FDI, using an approach that accounts for the endogeneity of China's FDI. Results suggest that China's rapid growth and attractions as a destination for FDI also encourages FDI flows to other Asian countries, as if producers in these economies belong to a common supply chain. There is also evidence of FDI diversion from OECD recipients. We interpret this in terms of FDI motivated by the desire to produce close to the market where the final sale takes place. Firms more inclined to invest in China for this reason are correspondingly less inclined to invest in the OECD. A detailed analysis of Japanese foreign direct investment outflows disaggregated by sector further supports these conclusions. J. Japanese Int. Economies 21 (2) (2007) 153–172.     

Dynamic relationship between China's inward and outward foreign direct investments

This paper studies the dynamic relationship of China's inward and outward foreign direct investments (FDI). It first identifies the key determinants of China's outward FDI (OFDI) in 172 host countries during 2003–2009 using a partial stock adjustment model. It finds strong evidence of dynamic adjustment in China's OFDI stock with an agglomeration effect. The dynamic adjustment and agglomeration effects are stronger in “high-tech” countries than in “low-tech” ones but indifferent in host country's resource endowments and income levels. The empirical results suggest that there exists a substantial adjustment cost in China's OFDI and that China's existing OFDI stock can gradually adjust toward its long-term equilibrium level, which is not only greater but also more volatile than the actual stock. Of particular interest is that we find a strong and positive relationship between lagged inward FDI (IFDI) and contemporaneous OFDI, implying that capital outflow from China has been partially induced by the countries which have invested in China.     

The Belt,the Road,and the carbon emissions in China

This paper explores the effect of the Belt and Road Initiative (BRI) on China's exports and the domestic carbon emissions induced by the exports. We employ a decomposition framework to assess the driving factors of the change of CO₂ emissions induced by China's exports to different destinations and evaluate the main contributions of the gap between the BRI countries and non-BRI (NBRI) countries. The decomposition results show that while the scale effect was the dominant force behind the pre-BRI emission growth, the contribution of the composition effect became more prominent after the inception of the Initiative. Our econometric analysis suggests that the Initiative leads to an increase in the share of carbon-intensive products in China's exports to the BRI countries by nearly 5 percentage points, which is approximately one quarter of the share of carbon-intensive exports to the BRI countries. A further investigation reveals that China's international project contracting is the main channel that has resulted in the increase of the share of carbon-intensive exports in China's exports to the BRI countries.