Re-examining the embodied air pollutants in Chinese exports

Abstract

China is the world's largest exporter and may release lots of air pollutants to produce exported commodities due to taking coal as its main source of energy. Processing exports play a significant role in Chinese exports, yet previous studies of embodied air pollutants in Chinese exports failed to distinguish processing exports from normal exports. This paper investigates the effect of trade heterogeneity on the estimation of embodied emissions by re-examining the embodied air pollutants in Chinese exports based on an extended non-competitive input-output table that distinguishes processing from normal exports. The results show that processing exports generate 22.81% of the value added embodied in gross exports and 16.48% of the emissions embodied in gross exports. The embodied air pollutants in Chinese exports would be overestimated by 12%-22% without accounting for trade heterogeneity. Unequal distributions of export-related air pollutants and value added exist among different sectors. In particular, Manufacturing of Electronics and Communication Equipment sector induces 39.56% of embodied emissions in processing exports, and 41.78% of which are generated by Production and Supply of Electric Power and Steam Hot Water sector. China's restrictions on processing exports should focus not only on the direct emissions generated by each sector but also on the emissions embodied in domestic supply chains.

Keywords: Air pollution; Embodied emissions; Input-output model; Normal exports; Processing exports; Trade heterogeneity.