The Pollution Flow Embodied In The Trade Of China's Industrial Products

For a developing country like China, the balance between trade development and environmental protection is a key problem needing to be solved. Industry is China's largest polluting sector and the main sector of international trade, and the process of industry products trade is accompanied by the transfer of pollution. There exists a virtual pollution flow hiding under the trade of China's industrial products, which causes important impacts to China's environmental quality.This paper discusses the influence of international trade on environmental pollution in theory, and studies China's international trade and industrial pollution status. Using an input-output model, choosing China's actual empirical data, considering both exports and imports impacts on environment, the pollution flow embodied in the trade of China's industrial products has been analyzed by dividing the industrial branch. The pollution flow's source, composition and the change of pollution flow after China's accession to WTO have been studied. Referring to the environmental impacts analytical framework, the causes of the pollution flow change has been analyzed. The conclusion indicates that: 40% of industrial SO2 needed by China's final demand originates from import. The main purpose of pollution import is to incorporate into the China's production processes through the inputs. Most of industrial SO2 embodied in exports generates from domestic industrial production. Industrial SO2 induced by export requirement accounts for more than 30% of the total. Through industrial products trade, from 2001 to 2004, China obtained environmental interests, while in 2005, China suffered environmental losses. Several low and moderate polluting branches such as leather, furs and related products, metal product and textile industry etc. are China's main pollution inflow branches, while some high and moderate polluting branches such as chemical industry, smelting and pressing of metals, and ordinary and special equipment etc. are China's main pollution outflow branches. Transport equipment is the only branch which has shiftsed from pollution outflow branch into the pollution inflow branch. The expanded industrial products export (import) scale plays a main role in the increase of the trade inflow (outflow). The trade structure has upgraded after accession to WTO, damaging China's environmental interests to a certain extent. The relative polluting rate of China's export products has increased more than the polluting rate of import products, so even under the condition of technology progress, China still has suffered a relative net pollution inflow increase.On the basis of former analysis the paper put forward the corresponding politic suggestions on coordinated development of China's trade and environment protection.