A Simulation Study Of China’s Imposing Carbon Tax To Respond To American Carbon Tariffs

In response to global climate change, the third meeting of the parties adopted the "Kyoto Protocol", which is designed to restrict greenhouse gas emissions in developed countries to curb global warming. Since the execution of the protocol, the global carbon dioxide emissions have been significantly reduced than expected, but the countries implementing emission reduction measures whose national competitiveness have been impacted. Carbon-intensive industries in these countries for the sake of reducing the cost of carbon emissions, will transfer their production to the nations or regions whose carbon reduction measures are not implemented.For the reason that, occident and other developed countries believe that the implementation of unilateral emission reduction measures will result in carbon leakage among different countries and regions, resulting in undesirable emission reduction. In this context, the European Union, the United States has to impose carbon tariffs on carbon-intensive goods imported the countries which have not adopted carbon reduction measures in the name of "carbon leakage", including China. According to the IEA, Since two thousand and nine, China has become the world’s largest exporter, and its exporting products are mainly belong to carbon intensive goods, exports are mainly dependent on the EU and the United States, therefore, once the developed countries led by the US and the EU beginning to impose carbon tariffs, will have a serious impact on China’s export trade and economy. Thus, it has important practical meaning to study the action that China actively reduces carbon emissions whether can be respond to the threat of carbon tariffs.This article analyses whether it’s feasible for China’s imposing carbon tax to respond to American future carbon tariffs. It has six parts. The first part focuses on the background information, a summary of the present research and innovations of the paper. The second part introduces the basic concepts of a carbon tax and carbon tariffs, allowing readers to have a preliminary recognition of the article. The third part mainly introduces the model and related data about carbon tariffs. By setting four simulation scenarios,which comprise of the US levying carbon tax of domestic products,the US levying carbon tax of domestic products and carbon tariffs of China’s export products,the same carbon tax policy on their domestic products implemented in China and the US and the differentiated carbon tax policy on their domestic products implemented in China and the US,the fourth part applies global trade analysis model to analyze Chinese economic, welfare, carbon emission reduction, export volumes and output under different simulation scenarios. The results show that: when adopting the same carbon tax policy, the action that China actively reduces carbon emissions can’t respond to the threat of carbon tariffs in the United States, while adopting the different policies, it can respond to the threat of carbon tariffs. Therefore, the carbon tariffs is not an effective emission reduction policy since its effect on reducing carbon emissions and preventing carbon leakage is very limited.The fifth part of this paper puts forward the policies and suggestions of Chinese response to carbon tariff in the international and domestic levels. Finally, it’s the conclusion and outlook of this article.