Embodied carbon emissions in China-US trade

Abstract

© 2020, Science China Press and Springer-Verlag GmbH Germany, part of Springer Nature. China-US trade holds great significance for the world’s political and economic landscape. Since 2018, the US government has imposed additional tariffs on Chinese exports on the grounds of the US trade deficit with China. However, the transfer of pollutants embodied in trade and the differences in environmental costs between China and the US have not been widely recognized. In this study, we quantify the embodied carbon emissions (the “virtual” emissions associated with trade and consumption) in China-US trade by constructing a carbon dioxide emissions inventory and a multiregional input-output model. The study shows that the US benefits from a trade surplus of environmental costs by importing energy-intensive and pollution-intensive products from China, which increases China’s environmental pollution and abatement costs. In 2017, 288 Mt CO2 emissions were associated with products produced in China but finally consumed in the US, and only 46 Mt CO2 were associated with the US products that were consumed in China. From this perspective, China-US trade results in a net transfer of 242 Mt CO2 per year from the US to China, accounting for approximately 5% of the total CO2 emissions in the US. More importantly, for Chinese products exported to the US, the carbon emissions embodied in one unit of economic value amount to 0.92 kg/$ (RMB: USD=6.8:1), but for US products exported to China, the carbon emissions embodied in one unit of economic value amount to 0.53 kg/$, which means China will incur environmental costs that are 74% higher than those of the US while enjoying the same economic benefits. This environmental trade deficit has burdened China with higher environmental costs thaneconomic benefits. To address this environmental trade deficit, China should actively promote further industrial upgrading and energy structure adjustment and increase investment in innovation and R&D, thereby increasing the value added per unit of export products and reducing the environmental cost of producing export products.