Research On The Impact Of Low Carbon Economy On The Development Of China’s Export Trade

The17th contracting party conference for UNFCCC(United Nations FrameworkConvention on Climate Change)was held in Durban, South Africa, during November28th-December9th,2011. The Durban Conference confirmed to promote the secondcommitment period of the Kyoto Protocol and launch the" Green Climate Fund’.Following the Kyoto Protocol, it is an epoch-making significant agreement of the globalclimate, which implies the establishment of the international mechanism for carbonemission reduction in the Post-Kyoto-Protocol era. Facing with the severe environmentaldeterioration caused by the global warming, the low-carbon economy is increasinglybecoming the common development mode of the whole world, which will have aprofound impact on human production and life. However, low-carbon economy is notonly a severe challenge, but also a rare opportunity for the development of China. Sincethe reform and opening up, China is in the process of the rapid progress ofindustrialization, which caused a significant increase of energy consumption and thetrend of rapid growth of carbon dioxide emissions. According to statistics, there is asharp rise of China’s carbon dioxide emissions in recent years. Furthermore, China hassurpassed the U.S. and became the world’s largest producers of carbon emissions in2006.Thus, it is urgent for China to develop the low-carbon economy. Particularly, thecontinuous expansion of China’s export trade, as one of the important driving force ofChina’s economic growth, is increasingly exacerbating the pollution of carbon dioxideemissions in China, which caused strong concerns of governments, academics and eventhe public both at home and abroad. Therefore, this paper has chosen the impact oflow-carbon economy on the development of China’s export trade as the entry point. Whatis the influence of low-carbon economy on the scale and pattern of China’s export trade?What conditions will be the changes of embodied carbon emissions of China’s exporttrade? How could we analyze the impact of low-carbon economy on the export trade ofvarious industries in China by using the scale effect, structural effect and technical effect?In what way will the regulations of low-carbon emission reduction affect theinternational competitiveness of China’s export trade? Faced with the serious challenge of low-carbon economy, how could China’s export trade achieve the low-carbondevelopment in the future? These problems will be the focus in this paper.With the methodology of theoretical and empirical analysis, this paper, on the onehand, gives the analysis on the situations and determinants of the carbon emissions ofChina’s export trade as well as the reasons on the influence of the regulation oflow-carbon emission reduction on the export trade of China, thereby providing theoryand data support for China’s exports of low-carbon development. On the other hand, withthe help of the Johansen cointegration analysis, Granger causality test and VAR modelanalysis, this paper makes the research on the relationship and the long-term effectsbetween the total carbon emissions and the scale and patterns of China’s export trade.Thereafter, it makes good use of input-output model to estimate the quantities andchanges of embodied carbon emissions of the export trade of various industries in China.Furthermore, it makes the analysis of the different impacts on China’s export trade ofvarious industries caused by the scale effects, structural effects and technical effect oflow carbon economy with the help of LMDI factor decomposition method. On this basis,this paper takes the carbon tariffs on behalf of the regulation of low-carbon emissionreduction to study its specific impacts on the international competitiveness of Chineseindustry exports. Based on the above theoretical and empirical research, this paperproposes countermeasures of low-carbon development and workable policyrecommendations suitable for China’s export tradeThe main conclusions of this paper are as follows:(1)From1978to2010, there is the existence of long-run equilibrium and short-termfluctuations in the relationship between China’s carbon emissions and the scale of its totalexport trade, which indicates that the increase of carbon emissions is the Granger causeof the expansion of export trade. Similarly, during the same period, there exists thelong-run equilibrium and short-term fluctuations in the correlation between China’scarbon emissions and its export trade patterns, which shows that the growth of China’scarbon emissions is the Granger cause of its general and processing trade patterns.Consequently, this paper shows that China’s low value-added extensive, high-carbondevelopment model is the main driving force of the expansion of the scale of China’stotal export trade and the growth of its export trade patterns, which not only proves that there exists the "non-environmentally friendly” feature in the scale and patterns of theexport trade of China, but also confirms that the heavy pressure would be brought by thehigh trade surplus and the rapid growth of China’s export trade to the low-carbonemission reduction of China.(2)With the help of China’s input-output sequence tables based on comparable pricesfrom1992to2007, this paper makes the calculation of the embodied carbon emissionsand its changes of China’s30industry exports by using the Walras-Kassel model and theinput-output method. This paper shows that the complete carbon producing coefficients(also known as “carbon emission coefficients”) of various industries as a whole havedecreased after China’s accession to the WTO. This trend is quite consistent with therestructuring and upgrading of China’s industries as well as the implementation ofChina’s energy conservation policy, which proves that there are some achievements inChina’s development of low-carbon economy. However, China’s industrial structurecharacteristics is still the labor-intensive, resource-based and energy-intensive pollutionemissions become very serious, which proves that the overall technology is laggingbehind, so that China is still dependant on the high input, high energy consumption of theextensive development mode. Although there is the rapid growth of China’s export tradeafter its accession to the WTO, China’s export products are mostly high-energy, highemissions of primary products. As a result, there has been a substantial increase in theembodied carbon emissions of China’s export trade, thus bearing a lot of carbonemissions for many other countries. Therefore, it is urgent for China to promote thetransformation and upgrading of the export trade, while it is desperately needed for Chinato develop and introduce the advanced energy conservation technology as well as makeand produce many low-carbon high-quality goods and services, thereby establishing aresponsible large country image of China and making great contribution to theinternational carbon emission reduction.(3)Through studying the ideology of Copeland&Taylor (2003), this paperestablishes a general equilibrium theory model about low-carbon economy and trade toresolve the impacts of scale effects, structural effects and technical effect caused by thelow-carbon economy on the international trade. Furthermore, on the basis of embodiedcarbon emissions of the export trade of China’s30industries, the paper makes an empirical analysis of the above three effects of embodied carbon emissions of China’sexports from1992to2007with the methodology of index decomposition method (LogMean Divisia index), namely the LMDI factor decomposition method. The findings showthat, during this period, observed from the direction of the impact of the three effects, thescale effect, the structural effect and the total effect of changes are in the same direction,which means that the scale effect and the structural effect are playing a "positive" role inthe “growth of carbon emission”. By contrast, the technical effects are in the oppositedirection to the total effect of changes, which implies that the technical effects areplaying a “negative” role in promoting the “reduction of carbon emissions”. Moreover,observed from the strength of the above three effects, the scale effect has made themaximum contribution to the growth of emission of China’s export trade. Similarly, thestructural effect has played a second important role in the growth of embodied carbonemissions in China’s export trade. However, the technical effect, to some extent, hasslowed down the growth of embodied carbon emissions of China’s export trade.(4)The research on the impact of the regulation of low-carbon emission reduction onthe competitiveness of China’s export trade is another innovation of this article. In theshort term, the carbon abatement cost is regarded as the factor inputs to increase theproduction costs of corporations, thus weakening a country’s comparative advantage andthe competitiveness of its export products. However, the view from the long-termdynamic effects could make a conclusion that the regulation of low-carbon emissionreduction will stimulate technological innovation of enterprises, thereby enhancing theinternational competitiveness of export products. This paper makes the second innovationto combining the complete carbon producing coefficient, the index of the power ofdispersion, the index of the sensitivity of dispersion, the index of the structure of exporttrade, and the index of the specialization measurement of the export trade in order tomeasure and study the impacts of the low-carbon economy on the competitiveness ofChinese export trade. Meanwhile, this paper makes a simulation set of carbon tariff rates,making an empirical analysis of the impacts of carbon tariffs on the internationalcompetitiveness of China’s industry exports. The conclusion shows that the carbon tariffs,as the representative of the regulation of low-carbon emission reduction, will cause aserious impact on China’s export trade of carbon-intensive industries. The limited profit margins of China’s exports will be further compressed by the high carbon tariffs.Therefore, the government, industries and enterprises of China should jointly study andimprove the development strategy of low-carbon economic to determine the suitabledevelopment model for China’s export trade, enhancing the core competitiveness to copewith the challenges of low-carbon economy and ensuring the truly sustainabledevelopment of China’s exports trade.