Drivers of carbon emission transfer in China—An analysis of international trade from 2004 to 2011

Journal Pre-proof Drivers of carbon emission transfer in China—An analysis of international trade from 2004 to 2011

Shuhong Wang, Xiaoqing Wang, Yun Tang PII:

S0048-9697(19)35919-4

DOI:

https://doi.org/10.1016/j.scitotenv.2019.135924

Reference:

STOTEN 135924

To appear in:

Science of the Total Environment

Please cite this article as: S. Wang, X. Wang and Y. Tang, Drivers of carbon emission transfer in China—An analysis of international trade from 2004 to 2011, Science of the Total Environment (2019), https://doi.org/10.1016/j.scitotenv.2019.135924

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Journal Pre-proof

Drivers of Carbon Emission Transfer in China—An Analysis of International Trade from 2004 to 2011 Shuhong Wanga,b, Xiaoqing Wanga, Yun Tanga* a

School of Economics, Ocean University of China, Qingdao 266100, Shandong, People’s Republic of China

b

Institute of Marine Development, Ocean University of China, Qingdao 266100, Shandong, People’s Republic of

China

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Abstract: Currently, studies on global industrial carbon emissions focus more on emissions from finished products. However, the emissions resulting from intermediate products are significantly increasing every year. This study analyzes the intermediate carbon emission transfer effort of 140 countries/regions in the global production network based on data from the Global Trade Analysis Project database. Since China is the largest emitter of carbon dioxide in the world, we further analyze China’s carbon transfer from the regional and sectoral perspectives. To this end, we use the structural decomposition analysis method to divide the factors influencing China’s emission transfer into five parts: emission intensity, export per capita, export structure, population, and production structure. The results show that the net inflow of emissions in China results from the trade process between China and developed regions, including regions in North America and Western Europe, particularly in the sectors of mechanical and electronic equipment and chemical, rubber, and plastic products. Further, the main destinations of China’s emission outflow are Latin America, South Asia, and Sub-Saharan Africa, particularly in the mineral, oil, and oilseed sectors. Moreover, emission intensity plays a crucial role in emission reduction, and production structure reversals negatively affect the growth of embodied emission. Finally, our analysis suggests that China should optimize its trade structure and promote low-carbon-emission technology.

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1 Introduction

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Key Words: Structural decomposition analysis; low-carbon-emission technology; GTAP database

Between 2005 and 2018, there was a rapid growth in international trade by more than 50%, and approximately 60% of this increase was attributed to the rise in exports from developing countries (Meng et al., 2018b). Over the years, society’s demand for natural resources has increased substantially, particularly over the past 20 years (Wu and Chen, 2017; Song et al., 2019a). Due to the sustained advancement of global trade liberalization and the strengthening of the international division of labor under the global production network, the redistribution of production links among countries is being extensively promoted based on the principle of optimal resource allocation (Duan and Jiang, 2018). Further, the continuous expansion of international trade, production, and consumption activities realize cross-border geographic divisions, leading to regional transfers of global carbon emissions (López et al., 2018). Specifically, developed economies are in the upstream of global value chains (GVCs) and are inclined to outsource their emission-intensive production activities to countries with lax environmental standards, which results in a global increase in emissions. Meanwhile, developing economies, which are generally in the downstream of GVCs, specialize in energy-intensive processing and manufacturing activities, which further exacerbate energy consumption and pollution (Cai et al., 2018). Currently, studies on these issues focus more on the carbon emissions of final products and *

Corresponding author. E-mail address: [email protected] (Y. Tang). Abbreviations: EEBT: emissions embodied in bilateral trade; EIO: environmental input–output analyses; IPCE: intermediary products’ carbon emissions; IPCEE: intermediary products’ carbon emissions embodied in export; IPCEI: intermediary products’ carbon emissions embodied in import; NIPCE: net intermediary products’ carbon emissions; SDA: structural decomposition analysis

Journal Pre-proof less on those of intermediate products (Muñoz and Steininger, 2010; Su and Thomson, 2016). However, intermediate products significantly contribute to carbon emissions every year, and this trend is increasing. Therefore, it is necessary to analyze intermediate products’ carbon emissions (IPCEs) and evaluate its associated transfer trends. In general, an IPCE exporter country does not export its carbon emission to the world but to the domestic country. However, the consideration of intermediate products changes this perception, since a country that produces intermediate polluting goods must export them to the contracting country. However, the carbon emission has already been confined to the products or been emitted within the producing country during the production process. Consequently, IPCE implies that the importing countries transfer their emissions to the exporter.

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Regarding countries with net carbon inflows, although international trade drives these regions’ economic development, it also attributes to them significant responsibility and pressure in terms of global emission reduction. Contrarily, for developed economies, their responsibility to reduce emissions is partly passed on to other regions through global trade, which may cause inequitable allocation of national emission reduction tasks. Therefore, investigating the transfer pattern of IPCE and examining the factors contributing to this pattern have vital implications in reshaping regional emission reduction responsibilities in the context of global climate policymaking.

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In this study, we first comprehensively analyze the global intermediate carbon emission flow patterns among 140 countries/regions based on data from the Global Trade Analysis Project (GTAP) database. Subsequently, we scrutinize the role and status of developing countries, particularly China, in global carbon emission transfer, which are reflected by both exports and imports. Finally, we separate industries into 57 sectors and evaluate the effects of different factors on IPCE using the structural decomposition analysis (SDA) method. We find that developed countries form a significant proportion of net IPCE importers (68%) and developing countries account for 98% of net IPCE export. Further, the data indicate that carbon emissions are gradually transferred from developed to developing countries, which makes developing countries “pollution havens.”

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Second, we examine the carbon emission flow from other countries to China and find that the United States transfers the most carbon to China, and it is followed by Japan, South Korea, and Germany. Since joining the World Trade Organization, China has established its status as the “factory of the world” and produces the most polluting goods and services for economic development. Accordingly, China is currently placed at the lowest level of the GVC and its exports are characterized by high degrees of emission intensity, since it specializes in raw-material smelting and processing activities in the GVC, which are the most emission-intensive manufacturing phases (Liu et al., 2015; López et al., 2018). However, following the financial crisis in 2008, the proportion of carbon inflows from major developed countries to China has declined. Third, we analyze in detail the causes of changes in carbon emission volumes and, using the SDA method, we divide the effect factors into five parts: emission intensity, export per capita, export structure, population, and production structure. We find that import per capita played a key role in increasing IPCE, whereas emission intensity had a negative influence on IPCE during 2004–2007. However, after the financial crisis in 2008, the situation changed during 2007–2011. The resulting shift in the production structure caused a reduction in both IPCE and emission intensity. This indicates a change in China’s production structure from pollution-promoting to innovation-promoting industries, which efficiently decreased the carbon emission. Compared to earlier research, this study makes the following contributions. First, most of the earlier studies focused on the embodied carbon transfer of trade between specific countries or regions alone; they neither indicated the transfer direction of emissions on a global scale nor revealed detailed policy significance for the determination of the global emission reduction responsibility. For instance, although Zhong et al. (2018) analyzed the characteristics of transnational transfer of embodied carbon in trade on a global scale, their study considered only 39 countries. Therefore, based on the GTAP database, the current study conducts a more detailed analysis of the global carbon emission transfer patterns of 140 countries/regions and discusses the role and status of developed and developing economies in international carbon transfer at the global level.

Journal Pre-proof Second, most of the studies on the emission transfer model of China, for example, classify trading partners according to their economic development levels or geographical locations or classify sectors according to the intensity of different production factors. Contrastingly, this study presents a geographical visualization of the transfer trend of carbon embodied in trade between China and 139 countries/regions worldwide and the associated changes. Further, it presents a comprehensive and detailed analysis on the transfer and change patterns of embodied carbon in the trade of 57 sectors in China, which provides significant insights for the formulation and implementation of more targeted emission reduction policies.

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Finally, based on the analysis of the emission transfer models of different sectors, this study analyzes the major regional flows of the major sectors contributing to carbon transfer in China, which have not been discussed by earlier studies. The carbon transfer in the sectors with the largest net inflow of emissions in China is mainly attributed to the trade process between China and developed regions, including North America and Western Europe, particularly in the sectors of mechanical and electronic equipment and chemical, rubber, and plastic products. Further, the main destinations for carbon transfer in the sectors with the largest net outflow from China, for example, mineral, oil, and oilseed sectors, are Latin America, South Asia, and Sub-Saharan Africa. The study’s findings provide new insights for the optimization of sectoral trade flows and development of multiple green trade partnerships to mitigate hindrances to carbon reduction.

2 Materials and methods

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Since China is the world's largest emitter of carbon dioxide, whether international trade increases total national emissions and makes China “pollution havens”, which countries and sectors the main sources and destinations of emission transfer are attributed to, and how to mitigate the growth of embodied emissions are key issues need to be addressed. In this context, by using the GTAP input-output data for 140 countries/regions, this study visualizes the change of intermediate carbon emission flow pattern of China and investigates the effects of different factors on IPCE transfer, which has important implications for policymakers to facilitate developing targeted environmental policies.

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2.1. Emissions embodied in trade

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Emissions from production activities include both direct emissions from the final production process and indirect emissions from the production links of intermediate goods (López et al., 2018). Specifically, embodied emissions refer to the total emissions generated in the upstream processing, manufacture, and transportation of products. The intricate web of relationships among different sectors of economies makes it difficult to calculate the emissions embodied in trade. In this context, environmental input–output analyses (EIOs) can effectively quantify energy and emissions embodied in trade across countries, which provide valid tools to illustrate the environmental consequences of economic activities (Meng et al., 2018b). Consequently, the emissions embodied in both exports and imports for 140 countries/regions are calculated in this study based on the EIO technique to investigate the regional flow patterns of global emissions and the roles of different economies in international carbon transfer. On extending EIOs to multiple regions, the emissions embodied in bilateral trade (EEBT) method is instrumental in identifying the sectoral interconnections in different regions in relation to environmental changes (Kanemoto et al., 2011). The monetary balance for each region is expressed as

xr  Zr  y r   e   e rs

s

r

sr

(1)

s

r

where x represents a vector for total sectoral outputs in region r; Z refers to domestic and imported industry requirements in region r; y r is the matrix of final demands for region r; and

e rs and e sr represent the exports from region r to s and imports to region r from region s (r is r unequal to s), respectively. In EEBT, the imports from Z and y r are excluded to focus attention on domestic productions:

Journal Pre-proof x r  Z rr  y rr   e

rs

(2)

s

The total direct and indirect domestic emissions from the production of a unit of final consumption can be calculated as (3) Tr  F r (I  A rr ) 1 where F r represents the direct emission intensity in region r and is calculated as sectoral emission divided by sectoral output (Muñoz and Steininger, 2010). Further, L  (I  A rr ) 1 refers to the Leontief inverse matrix; it captures both direct and indirect inputs to satisfy one unit of final demand and incorporates the domestic supply chain in EEBT. Within the framework, the emissions embodied in exports (IPCEE) from region r to s can be calculated using Eq. (4) and those in imports (IPCEI) to region r from s by Eq. (5), as follows: (4) IPCEE rs  Fr (I  Arr )1ers

IPCEI rs  F s (I  Ass )1esr

(5)

ss





IPCEI   IPCEI r

rs

rs

rs

  F s (I  A ss ) 1 e sr

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where A represents the technical coefficient matrix of the importing country. Due to the technological heterogeneity of different countries, IPCEI should be calculated using the technical coefficient of each importing country. Similarly, the total emissions embodied in exports and imports for region r can be calculated as shown in Eq. (6) and Eq. (7), respectively: IPCEE r  IPCEE rs  F r (I  A rr ) 1 e rs (6) (7)

rs

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Then, the net emissions embodied in trade for region r is

NIPCE r  IPCEE r  IPCEI r

(8) r where NIPCE represents the net emissions embodied in trade for region r. Further, NIPCE > 0 denotes region r is a net carbon importer, indicating that foreign trade development contributes to an increase in domestic carbon emissions; otherwise, region r is a net carbon exporter, implying that foreign trade development contributes to domestic emission reduction.

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2.2. Structural decomposition analysis

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It is noted that SDA has extensively been applied in the literature to quantify the driving factors of energy consumption and carbon emission changes (Su and Ang, 2012). Compared to other decomposition methods, SDA can not only differentiate a series of production and final consumption effects but also assess both direct and indirect effects along the entire supply chain (Ang, 2004; Meng et al., 2018b). Based on the SDA framework, bilateral emission transfers can be decomposed into corresponding changes in the constituent parts. According to Arto and Dietzenbacher (2014) and Feng et al. (2015), the variations in IPCEE and IPCEI are associated with emission intensity, population, production structure, trade structure, and export and import per capita, which are also the determinants of embodied emissions considered in this study. To decompose the emissions embodied in exports, the IPCEE from region r to s is expressed as

IPCEE rs  F r (I  A rr ) 1 e rs   f i Lij r

i

where f i

r

j

rs

rr

e j e rs r r rr rs P   f i Lij T j C rs P r rs r e P i j

represents the emission intensity of sector i in region r, Lij

sector i to produce one unit of the output of sector j in region r, T j

rs

rr

(9)

represents the inputs of

refers to the export share of r

rs

sector j in the gross exports, C indicates export volume per capita, and P represents the population in region r. In this context, the change in regional emission transfers embodied in exports between two timepoints during the sample period is calculated as IPCEE  IPCEE1 - IPCEE 0 . However, according to Guan et al. (2014), a unique solution for the decomposition process is unavailable. Further, as indicated by Dietzenbacher and Los (1998), there are n! decompositions rs

rs

rs

Journal Pre-proof without any residual terms for the case of n factors. Due to the large number of regions and sectors considered in this study, we refer to earlier studies and utilize the average of two polar decompositions (Arto and Dietzenbacher, 2014; Meng et al., 2018b). The specific forms of the two polar decompositions are shown in Eq. (10) and Eq. (11):

 





IPCEE a   f i Lij1 T j1 C1 P1   f i 0 Lij T j1 C1 P1 rs

r

i

rr

j

rs



rs

r

r

i



rr

rs

j

rs

r





  f i 0 Lij0 T j C1 P1   f i 0 Lij0 T j 0 C rs P1 r

i

rr

rs

rs

j



r

  f i 0 Lij0 T j 0 C0 P r

i

rr

rs

rs

r

r



i

rr

rs

r

(10)

j

j

 f a  La  Ta  Ca  Pa

 





IPCEE b   f i Lij0 T j 0 C0 P0   f i1 Lij T j 0 C0 P0 rs

r

i

j

rr

rs



rs

rs

r

r

i



rr

rs

j



rs



r

  f i1 Lij1 T j C0 P0   f i1 Lij1 T j1 C rs P0 j

rs



  f i1 Lij1 T j1 C1 P r

i

rr

rs

rs

j

r

r



r

rr

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i

rr

i

rs

j

r

(11)

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r

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 f b  Lb  Tb  Cb  Pb

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Therefore, the change in regional emission transfers embodied in exports can be expressed as the average of two polar decompositions:





1 rs rs IPCEE a  IPCEE b 2 1 1 1  f a  fb   La  Lb   Ta  Tb  2 2 2 1 1  Ca  Cb   Pa  Pb  2 2  f  L  T  C  P

(12)

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IPCEE rs 

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Further, Eq. (12) denotes the contributions to changes in IPCEE that are triggered by the changes in emission intensity (  f ), production structure ( L ), export structure ( T ), export per capita ( C ), and population effect ( P ), when other variables remain constant. Analogously, the changes in IPCEI can be decomposed into changes in emission intensity, production structure, import structure, import per capita, and population effect.

2.3 Data sources

We obtain the economic input–output data for 2004, 2007, and 2011 from version 9 of the GTAP database to estimate the transfer effects of global and national emissions embodied in trade. The GTAP database provides detailed interregional multisector input–output data on the production, consumption, and intermediate use of commodities and services, as well as providing bilateral trade information on 57 sectors among 140 regions (120 single countries and 20 country groups). Table S1 provides the detailed list of countries, and Table S2 presents the codes of the 57 sectors. We utilize the implicit price deflator provided by the National Account Main Aggregates Database to adjust the monetary data to ensure the data’s comparability. In addition, the data for sectoral carbon emissions from fossil fuel combustion, as well as the population in each region, are obtained from the GTAP database. Since the GTAP’s classification of regions and sectors is extremely detailed, our analysis of global transfer patterns for emissions embodied in trade based on the database has significant implications for the responsibilities that should be assumed by nations in global climate governance, as well as the realization of low-carbon economic development.

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3 Results and discussion 3.1 Carbon emission transfer trend We first calculated the IPCEE values for each country and sorted them by the gross domestic product (GDP) per capita. Subsequently, we drew a trend line to describe the situation, as shown in Fig. S1. We found that rich countries (with high GDP per capita) are willing to offshore polluting industries, whereas poorer ones are willing to adopt these industries.

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Table 1 lists the 15 countries/regions that recorded the highest embodied emissions in 2011 and their contributions to the global emissions embodied in both exports and imports. In terms of IPCEE, China is the largest exporter in the global carbon transfer network; it is followed by the United States, Russia, India, and Canada. Among these countries, China contributes approximately 1523 million tons (Mt) of CO2 embodied in exports, and the IPCEE of the United States reached 553 Mt in 2011, which represent 31% and 11% of the total worldwide embodied emission, respectively. Countries with high embodied emissions are typically either developed or large-scale developing countries. They have extensive trade relationships with other economies and are leading forces in both global trade and its accompanied emissions due to their unique advantages in terms of technology, labor force, and energy resources (Duan and Jiang, 2018). [Table 1 here]

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In terms of the emissions embodied in imports, the three top-ranking countries are the United States, China, and Japan, and they contribute 756, 354, and 322 Mt CO2, respectively. In addition, Germany, Korea, the United Kingdom, France, India, and Italy are the leading driving forces of global emissions embodied in imports. In summary, the countries with the largest IPCEI values in Table 1 contribute approximately 3236 Mt CO2 and account for approximately 60% of the total global import emissions. However, with respect to IPCEE, the statuses of the United States and China are interchanged. The U.S. emission embodied in import is approximately 1.4 times that in export, whereas the IPCEI of China is less than a quarter of its IPCEE, that is, the United States and China are the most important demander and supplier in global trade–related emissions, respectively. Regarding economic development, the top-ranking 15 countries primarily include some developed economies and the BRIC countries. In other words, the demand in international trade and embodied emissions are no longer dominated by developed economies alone, unlike the situation before the financial crisis, as indicated by Jiang and Guan (2016). Our results highlight the increasingly critical role played by developing economies in the global emissions embodied in imports, which is in line with the findings of Duan and Jiang (2018). To ensure a clear distinction of the global emissions flow pattern, we further geo-visualize the net emissions embodied in trade for 140 countries/regions in Fig. S2. The countries in the blue area represent net carbon importers, whereas those in the red areas indicate net carbon exporters. Based on Fig. S2, the world can be divided into three groups based on NIPCE flows: net carbon importers, net carbon exporters, and the roughly balanced group. The net carbon importers are mainly concentrated in developing economies in Asia and Eastern Europe, with China being the largest contributor. Nations such as China, Russia, and South Africa are primarily engaged in product processing and high-carbon-intensity manufacturing activities, which promote domestic emissions (Cai et al., 2018). The major net carbon exporters are some developed economies, such as Japan, the United States, Korea, and Western European countries, which conforms to the findings of some earlier studies (e.g., Arto and Dietzenbacher, 2014; Zhong et al., 2018). This group is characterized by the import of most of the inputs of economic activities, particularly energy-intensive products, through international trade, which contributes to national emission reduction. The roughly balanced group comprises some countries with net inflows/outflows less than 10 Mt. As illustrated by Wang et al. (2017), such countries have limited effect on global emission transfer due to their negligible impact on the global economy and related emissions. To further clarify the roles played by different countries in international carbon transfer, the proportions of contributions of developed and developing economies to global embodied emissions are aggregated in Fig. S3. Developed economies form a more significant share of both IPCEI (56%) and the global net imports of emissions (68%) compared to developing countries.

Journal Pre-proof Contrastingly, developing economies account for 70% of IPCEE and 98% of the global net export of emissions, respectively. The findings indicate that emissions are gradually transferred from developed to developing economies, causing developing countries to become pollution havens. With the continuous transfer of highly polluting and energy-intensive industries, a new trend has emerged whereby carbon emissions occur in developing economies partly due to changes in the domestic demand of developed economies (Arto and Dietzenbacher, 2014). This is because, with the increased occurrence of international production fragmentation, countries are increasingly becoming specialized in different production activity stages.

3.2 Changing trends of emissions embodied in China’s foreign trade

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The empirical analysis in the previous section revealed that China ranks highest in IPCEE, IPCEI, and NIPCE values among the 140 countries/regions considered in this study, which indicates China’s possibly vital role in determining global carbon flows. Furthermore, as the largest carbon emitter, China is under enormous pressure to reduce carbon emissions, particularly since it announced its commitment to cap its carbon emissions by approximately 2030 (Song et al., 2019b). To achieve this goal, it is necessary to understand whether China’s trade with each country contributes to emission outflow or inflow and how the emissions’ flow pattern varies over time.

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Table S3 lists 15 trading partners of China that recorded the largest embodied emissions during the study period and reveals each partner’s contribution to China’s IPCEE and IPCEI in several subperiods. As shown in Table S3, the United States is the biggest recipient of IPCEE from China; it is followed by Japan, South Korea, and Germany. The major recipients are developed countries and BRIC countries such as India, Russia, and Brazil. From the perspective of temporal changes in trends, the proportions of carbon inflows from major developed countries to China either initially increased and then decreased or continued to decrease during 2004–2007 and 2007– 2011. In particular, China’s IPCEE to the United States, Japan, South Korea, and Western European countries shows a downward trend in both absolute quantity and relative proportion from 2007 to 2011. Meanwhile, the proportions of China’s IPCEE to India, Vietnam, and Brazil continued to increase from 1.255%, 1.034%, and 0.767% in 2004 to 3.614%, 1.877%, and 1.936% in 2011, respectively. This is probably because, economically, developing countries performed better than their developed counterparts after the financial crisis in 2008 (Duan and Jiang, 2018; Chen et al., 2019a).

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In terms of receiving IPCEI from trading partners, the United States remains China’s largest contributor; however, it presents a great imbalance between IPCEE and IPCEI, since the carbon outflow from China to the United States is much lesser than the inflow. Compared to IPCEE, the main sources of China’s IPCEI are developing economies, including BRIC countries, Kazakhstan, Iran, and Southeast Asian countries. As proved by Meng et al. (2018b), China should import large numbers of raw material inputs, including extractive products, petroleum, and minerals, from other developing countries under its energy-intensive economic growth pattern, which will contribute to the high degree of emissions imported by China from developing economies. In terms of the changing trend, China’s IPCEI from some developed economies and BRIC countries have increased to a different extent, whereas the IPCEI from South Korea and Taiwan showed a slightly downward tendency during 2004–2011. Further, emissions imported by China from developing countries are growing much faster than those imported from developed countries. Furthermore, the IPCEI from Southeast Asian countries remained approximately invariant, whereas their proportions decreased slightly during the period. To clearly distinguish the flow patterns of China’s NIPCE in the global production network and examine the country’s role in bilateral trade with different countries, we further geo-visualize the net emission flows embodied in the trade between China and each trading partner and its changing trend in Fig. 1. The arrows in each panel indicate the top seven transfers of China’s NIPCE. As shown in Fig. 1, the top seven net carbon inflows to China are attributed to the United States, Japan, South Korea, and Western European countries, whereas the top seven net carbon outflows from China are associated with less developed countries. Further, countries in the blue area represent those for whom China is a net carbon importer in relevant partnerships, whereas the red areas indicate the regions where China is a net carbon exporter in relevant partnerships. Accordingly, we conclude that China is a net carbon importer in almost all its bilateral

Journal Pre-proof partnerships, except for its partnerships with several developing countries, such as South Africa, Kazakhstan, Qatar, and Oman, which confirms the findings of Zhu et al. (2018). Further, the results indicate that China has become a pollution haven for not only developed economies but also several developing economies through international trade.

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Moreover, in terms of the changing trend, the major trading partners show four different characteristics of change with respect to NIPCE flow patterns. First, the net carbon inflows to China from developed countries increased during 2004–2007 and decreased during 2007–2011. Second, the net emission outflows from China to several countries—such as Russia, Argentina, and Venezuela—were reversed during the sample period, as indicated by the yellow arrows in Fig. 1. For example, Russia received 12 Mt NIPCE from China in 2004 and, in turn, transferred 1 Mt to China in 2007, and the inflow increased to 4 Mt in 2011. This finding is in line with the result of Lin and Xu (2019), who confirmed that China has become a net carbon importer in its trade with Russia since 2007. The reason for this trend is the expansion of export to Russia. Third, the net emission inflows to China from several countries, including Iran, Kazakhstan, and Qatar, have been reversed, as indicated by red arrows in Fig. 1. This was caused by the growth of energy-intensive product exports to China, including natural gas, petroleum, and metallic materials and products. Finally, South Africa and Oman have been serving as net carbon importers characterized by the growth of net emission inflows in their trade with China. Minerals, petrochemicals, and metal materials and products account for most of the export share of these countries to China, which contributes to the outflow of embodied pollution from China.

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[Fig. 1 here]

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To analyze the transfer pattern of carbon emissions embodied in China’s trade, we divide the world into 10 regions. Table S4 depicts a detailed list of regions, among which NOA, WEU, and POECD are developed regions and the others indicate developing ones. As shown in Table S5, the main destinations of the emissions embodied in China’s export trade are North America, Western Europe, and POECD, which are all developed regions. The total share of these three regions is more than 51% of the carbon emissions embodied in China’s export trade, whereas the other regions only occupied smaller shares, indicating that the regional flow shares of carbon emissions embodied in China’s export trade were unbalanced. From the perspective of the changing trend, during 2004–2011, North America, Western Europe, and POECD were always the largest recipients of carbon emissions embodied in China’s export trade; however, their shares declined over time. In 2004, North America, Western Europe, and POECD accounted for 26.832%, 21.121%, and 16.225% of the carbon emissions embodied in China’s export trade, respectively, and these values decreased to 21.653%, 18.731%, and 11.022%, respectively, in 2011. Meanwhile, the shares of carbon emissions flowing into China from the other seven regions, except East Asia, increased every year. In other words, the unevenness of the carbon emission flow embodied in China’s export trade decreased during this period compared to earlier periods, and China’s carbon export destinations became scattered. This was the result of China’s trade diversification strategy, which was conducive to the reduction of its trade risks. In addition, from the perspective of regional development, NOA, WEU, and POECD are developed regions, whereas the others are developing regions. During 2004–2011, the shares of carbon emissions in China’s exports to developed regions showed a declining trend, whereas those to major developing regions followed an increasing trend, which indicates that the destinations of carbon emissions embodied in China’s exports were partially transferred from developed to developing countries. Before 2007, China’s exports were highly dependent on import demands from developed regions, particularly North America and Western Europe. However, since the global financial crisis, the import demands of developed regions have remained far below those of developing regions (Mi et al., 2017). Further, the growth of its trade with the developing world has created a strong growth momentum for the carbon emissions embodied in China’s exports to the developing world. From the perspective of the regional flows of carbon emissions embodied in China’s imports, the main sources are North America, transitional economies in Europe and Central Asia, and Latin America and the Caribbean region. Further, from the regional flow share perspective, the equilibrium of regional flow of carbon emissions embodied in imports was slightly better than that embodied in exports. Similarly, from the perspective of the absolute amount of carbon emissions in imports, China’s carbon emissions to each region, except East Asia, increased every year. The

Journal Pre-proof main reason was that China needed to import more energy and raw materials to meet its domestic production demands due to improvements in its domestic consumption level and manufacturing capacity.

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In terms of the net carbon emissions embodied in China’s trade, the NIPCE is positive for all regions, indicating that China has become not only a pollution haven for developed regions but also a net importer of carbon from developing regions. The three regions receiving the highest net carbon inflows from China are North America, Western Europe, and POECD, which transferred a total of 696 Mt in 2004, accounting for more than 70% of China’s total NIPCE. This result further reflects China’s position in terms of the international division of production. Due to China’s low environmental standards and apparent comparative advantage of labor force, several pollutionand labor-intensive processing and assembly processes have been transferred from developed areas to China. Meanwhile, the low-carbon life in developed areas relies on the import of industrial products from developing countries (Cui and Song, 2019a; Chen et al., 2019b). In this process, the carbon emission reduction responsibility of developed regions is transferred to China through interregional trade (Muñoz and Steininger, 2010; Arce et al., 2016; Su and Thomson, 2016). From the perspective of this changing trend, during 2004–2007, the net carbon inflows from both developed and developing regions to China showed an increase, with the exception of the POECD region. However, the growth change showed a major difference, with developed and developing regions increasing their net carbon inflows to China by an average of 12% and an average of over 117%, respectively. The largest growth was recorded by the economies in transition in Europe and Central Asia, which grew by more than threefold between 2004 and 2007, reflecting the rapid development of trade and investment cooperation between China and Eastern Europe, Central Europe, and Central Asia during this period. During 2007–2011, due to the global financial crisis, the net carbon inflows to China from developed regions and EAS, MNA, and EIT in table S4 showed a downward trend, whereas the emissions embodied in trade between Southeast Asia, South Asia, Latin America and the Caribbean region, Sub-Saharan Africa, and China showed an upward trend. In other words, after the financial crisis, the import demand of developing regions was stronger than that of developed regions, which promoted rapid development of the South–South trade.

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By analyzing the transfer model of carbon emissions embodied in China’s trade, we surmised the following salient features: First, through foreign trade, China has currently become a pollution haven for some major regions, which is not conducive to the country’s carbon emission reduction efforts. Second, the regional flow shares of carbon emissions embodied in China’s import and export are not in equilibrium. The unbalanced development of net carbon transfer burdens the country with more responsibility for transferring its carbon emissions internationally. Third, from the perspective of embodied carbon emission transfer trends, developed regions such as North America and Western Europe remain the main contributors of China’s net carbon inflow, that is, the leakage of developed countries’ emissions through bilateral trade with China under unilateral climate policies is not conducive to the realization of global carbon emission reduction targets. Fourth, the carbon transfer model is gradually becoming diversified. Since the occurrence of the global financial crisis, the emissions embodied in trade in developing regions and China has been increasing, whereas the net carbon inflows and shares of developed regions to China have been showing a downward trend. This reflects, on the one hand, the weak trend of import demand growth in developed regions and, on the other, the rapid development of China’s trade with developing regions and the strengthening of bilateral economic and trade cooperation.

3.3 Aggregate structural decomposition analysis of changes in embodied emissions To obtain better insight into the forces driving the changes in China’s embodied emissions, we applied the SDA method to identify the contributions of emission intensity, production structure, export/import structure, export/import per capita, and population effects on embodied emissions, as well as estimating the variation trend of these drivers during two periods, 2004–2007 and 2007–2011. Fig. 2 depicts the contributions of the five drivers of China’s IPCEE in its trade with 10 regions and the associated variation trends. The total effects are indicated by the black line and the subeffects caused by each driver by bar charts. Evidently, the growth of emissions

Journal Pre-proof embodied in exports between China and each region is attributed to the increase in export per capita. With the strengthening of China’s participation in international vertical specialization, the export scales in a series of production departments are growing rapidly since significant manufacturing outsourcing has been undertaken from developed countries, which promotes IPCEE growth. In turn, the leading contributor that offsets this IPCEE growth is emission intensity effect. This finding indicates that the energy-saving and emission-reducing measures adopted in recent years have had favorable effects, which have contributed to energy efficiency improvement and IPCEE decline.

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Moreover, the effects of production structure, export structure, and population effects were proved to be minimal. During 2007–2011, emission intensity and export per capita effects were the strongest factors affecting emission mitigation and emission growth, respectively. From the perspective of the changing trend, the contribution of the emission intensity effect decreases in the trade between China and developed regions, including NOA, WEU, and POECD, but increases in the trade between China and developing regions. In other words, the emission intensity effect plays a significant role in reducing emissions embodied in the trade between China and developing regions. Further, the complete reversal of the production structure’s contribution has started exerting a negative influence on IPCEE growth. This is mainly attributed to the transformation and upgrading of the industrial structure from a labor-intensive and resource-oriented pattern to a capital-intensive and technique-oriented pattern. In addition, compared to the previous period, the volume of emission reduction triggered by the production structure shift increased by 23 times, highlighting the important role played by the shifting production structure in carbon emission mitigation. Nevertheless, the annual impact of export structure on emission reduction remains negligible, which implies the significant possibility of inhibiting an increase in emissions by promoting the optimization and upgrading of export structure. [Fig. 2 here]

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The contributions of emission intensity, production structure, import structure, import per capita, and population effects to China’s IPCEI in its trade with major regions are depicted in Fig. 3. It is found that import per capita plays a key role in increasing China’s imported emissions, as a result of the growth of domestic demand for final products and demand for raw material inputs in trade processing. In comparison, the contribution of emission intensity to nearly all trading partners during both 2004–2007 and 2007–2011 is negative, indicating that the improvement in emission intensity is conducive to carbon emission reduction. Compared with the two aforementioned factors, the population effect exerts a slightly positive influence on the changes in China’s IPCEI and the contributions of the production structure and import structure vary for different trading partners over different periods. Further, the upward influence of import structure grows substantially in China’s trade with LAM and SSA regions, whereas the contributions of the import structures from EAS, EIT, PAS, and SAS regions are reversed from a slightly negative effect to a significant positive effect. This is mainly because carbon-intensive products account for a large proportion of the imports to China from these developing economies. The results reveal that compared to these economies, China holds an advantageous position from the perspective of the international division of labor. [Fig. 3 here]

3.4 Key source and destination sectors of the emissions embodied in China’s trade This section further examines the sectoral heterogeneity of carbon emissions embodied in China’s overall foreign trade and subregional trade. Table S6 reports the carbon levels embodied in import, export, and net trade of 57 sectors in China for the years 2004, 2007, and 2011, respectively. According to the sectoral distribution of IPCEE, the carbon emissions embodied in China’s exports are concentrated in sectors such as S41, S40, S33, S27, S37, and S28, that is, sectors such as mechanical equipment; electronic equipment; chemical, rubber, and plastic products; textiles; metal products; and clothing. Based on industrial characteristics, these sectors with high carbon emissions embodied in export belong to the heavy manufacturing and textile and

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clothing industries, which are both emission- and labor-intensive, but low-value-added, industries. From the perspective of the changing trend, during 2004–2007, the carbon emissions embodied in the export of major sectors showed an increasing trend. Between 2007 and 2011, the growth rate of emission-intensive industries, such as machinery and equipment; electronic equipment; and chemical, rubber, and plastic products, slowed down, whereas the growth trend of labor-intensive sectors, such as textiles and clothing, shifted to a downward trend. The main reasons for these changes are as follows: First, the global financial crisis and economic slowdown reduced the demand for foreign imports, leading to a decline in China’s exports. In particular, sectors with high carbon emissions embodied in export, such as mechanical and electronic equipment, have a relatively short industrial chain in China and mainly involve the processing and assembly processes (Zhang et al., 2017). As a result, the export volume and its embodied carbon emissions were significantly affected by the reduction in international market demand. Second, to revive the manufacturing industry in developed countries, their governments have introduced a series of preferential policies in recent years, such as tax breaks and exemptions, which have effectively attracted the attention of multinational companies and reflow of investment in the manufacturing sector (Wang and Song, 2017). Third, the rapid growth of China’s environmental, land, and labor costs in recent years have weakened its traditional competitive advantages. Accordingly, developing countries such as India, Vietnam, and Mexico are undertaking part of the transfer of international production capacity by offering low labor and land costs. In this context, some labor-intensive enterprises mainly engaged in processing transferred their production capacity to countries offering lower costs, thereby reducing the export volume and embodied carbon emissions of China’s labor-intensive sector.

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According to the sectoral distribution of IPCEI, the top three sectors with the highest carbon emissions embodied in import are chemical, rubber, and plastic products; mechanical equipment; and electronic equipment. They account for more than 60% of the total emissions. Compared with the sectors having export carbon emissions, the top three sectors with the highest carbon emissions embodied in import are the same as those sectors with emissions in export; however, the carbon content of the imports in these sectors is much lower than that of the exports. Moreover, the carbon emissions embodied in the import of sectors S18, S35, and S36, that is, minerals, ferrous metals, and metal sectors, are high. Overall, the carbon emissions embodied in China’s import are concentrated in sectors such as heavy manufacturing and energy. In terms of the changing trend, the mineral, petroleum, ferrous metal, and metal sectors experienced the highest growth rates between 2004 and 2011, with an average growth rate of more than 168%. In particular, the carbon emissions embodied in the import of mineral sectors increased from 13.72 Mt in 2004 to 63.29 Mt in 2011, implying an increase of approximately four times, and became the sectors with the highest carbon emissions embodied in import in China. Since the beginning of the 21st century, while restricting the export of highly polluting and energy-consuming products, the Chinese government has been increasing incentives to promote the import of energy and resource products to meet the growing energy demand and relieve the environmental pressure caused by the domestic production of related products (Arce et al., 2016). With the continuous increase in domestic emission-intensive processing, production, and export, China’s demand for energy, metallic raw materials, and mineral resources, as well as the scale of import, rapidly increased, which is reflected in the rapid increase in carbon emissions embodied in import in the energy and resource sector and conducive to alleviating the growth of China’s emissions and pollution to some extent. Based on the sectoral distribution of NIPCE, the three sectors causing the highest emissions in China are S41, S40, and S33 in table S2, indicating that mechanical equipment; electronic equipment; and chemical, rubber, and plastic products are the major sectors causing emission inflow. Further, sectors S27, S28, and S37, that is, textiles, clothing, and metal products, have high net trade embodied carbon. This finding is nearly consistent with the results of Liu et al. (2015) and Lin and Xu (2019) on the net carbon emissions embodied in China’s trade. Conversely, the top three sectors that consume in China but cause emissions in the rest of the world are S18, S16, and S5, that is, the minerals, oil, and oilseeds sectors are the major sources of China’s outflow emissions. Further, the trade embodied carbon outflows of sectors S17, S7, and S21 are high, indicating that China provides net embodied carbon export in the natural gas, plant fiber, and vegetable oil sectors. In general, the foreign trade of heavy manufacturing and textile and clothing

Journal Pre-proof industries increases domestic emissions and aggravates the degree of environmental pollution, whereas the foreign trade of the energy industry and agricultural sector helps alleviate the pressure of carbon emission reduction in China. Accordingly, China should actively optimize its foreign trade structure; reduce the export proportion of heavy manufacturing and textile and clothing industries; expand the import of the energy industry and agricultural sector to meet relevant domestic demands; and further promote energy conservation and emission reduction in key sectors, including heavy manufacturing and textile and clothing industries.

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Considering the differences in the scale and structure of China’s trade with different regions of the world, this study further analyzed the industrial distribution characteristics of trade-embodied emissions among China’s trade with different regions based on the known distribution of the sectors with embodied carbon emissions in foreign trade. Further, it identified the regional flows of the major sectors contributing to China’s trade-embodied carbon emissions. Accordingly, Figs. 4 and 5 depict the sectoral distributions of IPCEE and IPCEI, and the sectoral distributions of NIPCE are shown in Fig. S4, respectively, in the trade between China and different regions during 2004–2011. Further, Figs. 4 and 5 depict certain similarities and differences in the distributions of sectors with embodied carbon emissions in the country’s trade with different regions. The first similarity is that sectors S41, S40, and S33 (mechanical equipment; electronic equipment; chemicals, rubber, and plastic sectors, respectively) are the major sectors responsible for the inflow of emissions from China in each region. This reflects how China’s heavy manufacturing industry affects the rest of the world. With the strong support of national industrial policies, heavy manufacturing industries, such as mechanical and electronic equipment, have shown fast development and progress and played an important role in promoting the rapid development of China’s economy and industrialization. The emission-intensive manufacturing processes included in China’s heavy manufacturing sector cause massive carbon emissions to flow into China from not only developed but also developing regions.

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The second similarity is that sector S18 is a major contributor to the country’s emissions outflow to all regions, and its contribution is increasing, except in Western Europe and East Asia. Further, the growing domestic energy demand has necessitated an increase in the import scale of mineral resources and, thereby, considerably relieved the pressure on the country to reduce emissions. Moreover, industrial differences in the carbon emissions embodied in trade with different regions are reflected in other important industries, as well. For example, the carbon embodied in the textile and clothing industry accounts for a significant share of the carbon transferred to China from other regions, including EIT, LAM, POECD, PAS, SAS, SSA, and WEU. Further, the carbon embodied in ferrous metals and metal products sectors plays an important role in explaining the transfer of carbon emissions to China from North America, East Asia, Southeast Asia, the Middle East, and North Africa. Contrastingly, the embodied emissions in oil, gas, and metals play an important role in the transfer of carbon emissions from China to EIT, LAM, MNA, and SSA regions, whereas the embodied emissions in the oilseeds sector form a significant share of China’s carbon transfer to NOA and LAM. [Figs. 4 and 5 here]

Based on the share of embodied carbon in different sectors in different regions, we further identified the major regional flows of the important sectors of carbon emissions embodied in China’s trade to provide a basis to formulate targeted national carbon emission reduction policies and alleviate the foreign trade–related environmental pressure on the country. According to the earlier analysis, the sectors with the largest net inflow of emissions in China were mechanical and electronic equipment and chemical, rubber, and plastic products. As shown in Figs. 4 and 5, the carbon transfer in these three sectors occurred in the trade between China and developed regions, including NOA, POECD, and WEU. Although IPCEE and IPCEI in all the three sectors ranked among the three highest values in each region, the carbon content of exports was much higher than that of imports. The reasons for this phenomenon are as follows. First, China exports far more machinery; electronics; and chemical, rubber, and plastic products to developed regions compared to its imports. Second, China’s domestic production of carbon emissions remains relatively high compared with the production of major developed regions. Third, the huge difference between IPCEE and IPCEI among China and developed regions is attributed to the differences in their

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import and export product structures. Since the major developed regions occupy the top end of the global industrial chain, they are more actively engaged in the design and marketing of high-tech products and dominate the export of industrial standards and key components. Therefore, China mainly imports clean, high-tech, and high-value-added mechanical products and high-end components from the developed regions. In contrast, since China’s heavy manufacturing industry is located in the middle and lower reaches of the global industrial chain, it undertakes more production and processing activities, which involve high carbon emission, while participating in the international division of labor. Therefore, China’s exports to developed regions are mainly emission-intensive low-value-added products. Moreover, according to earlier analyses, the sectors with the largest net outflows from China are minerals, oil, and oilseeds. Specifically, as shown in Fig. S4, the main destinations of carbon transfer in China’s mineral sector are Latin America and the Caribbean region, South Asia, and Sub-Saharan Africa, and the main destinations of carbon transfer in the oil sector are EIT, MNA, and SSA. Further, the carbon transfer in the oilseed sector mainly occurs with Latin America and the Caribbean region and North America. The results show that China is attempting to reduce carbon emissions by importing energy, minerals, and primary agricultural products from developing regions. The findings highlight the importance of enhancing complementary trade with developing countries and South–South cooperation to address climate change issues, which will provide China with an important opportunity and path to achieve carbon reduction.

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3.5 Sectoral structural decomposition analysis of changes in embodied emissions

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We applied the SDA method to determine the contributions of emission intensity, production structure, export/import structure, per capita export/import, and population to different sectors and their changing trends. Further, Fig. 6 reports the corresponding contributions of the major driving factors to the emissions embodied in the export of 57 sectors in China and the relevant changing trends for 2004–2007 and 2007–2011. According to the sectoral distribution of the IPCEE driving factor effect, although the effect of emission intensity on emission reduction is the same for all sectors, the degree of contribution to emission reduction varies among sectors. The sectors with the most significant emission intensity effects were S41, S40, and S33, whose carbon emissions were reduced by 81, 65, and 50 Mt, respectively. This result indicates that the emission efficiency of the mechanical equipment; electronic equipment; and chemical, rubber, and plastic product sectors underwent significant improvement and played an increasingly important role in reducing the carbon emissions of the sectors, driven by energy conservation and emission reduction policies. Contrarily, export per capita caused different degrees of increase in emissions in all sectors, which was almost consistent with the results of Lin and Xu (2019) on the carbon effect of export scale on China’s trade. The sectors with the most significant increase in emissions from export per capita were S41, S40, and S33, followed by S27, S28, and S35, all of which increased carbon emissions by a total of 454 Mt. This indicates that the expansion of export scale had the strongest positive impact on IPCEE in the heavy manufacturing and textile and clothing industries and increased China’s emission reduction burden. Compared with the effects of the two aforementioned factors, the influence of production structure and population effect on the IPCEE of various sectors in China was very small. In addition, the export structure had different effects on various sectors. The export structure effect was significantly positive in the sectors S41, S35, and S33, that is, an increase in the export proportion of mechanical equipment; ferrous metals; and chemical, rubber, and plastic products had a strong positive effect on IPCEE growth. Contrastingly, the export structure effect was significantly negative in the sectors S40, S15, S27, and S28, that is, a decline in the export proportion of electronic equipment, coal, textiles, and clothing sectors led to a reduction in embodied carbon emissions during 2004–2007. From the perspective of the changing trend, the effect of sector S39’s export structure on IPCEE became positive; this proves that the proportion of China’s transportation equipment export, as well as the associated carbon emissions, has increased in recent years. Contrarily, the positive effect of the ferrous metal sector became negative, whereas the positive effect of the mineral and metal product sector showed a downward trend. This result suggests that an improvement in the export structure of metals, mineral resources, and their products can help reduce the carbon emissions caused by resource extraction and smelting.

Journal Pre-proof [Fig. 6 here]

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Fig. 7 reveals the corresponding contributions of the five driving factors to the carbon emissions embodied in trade in various sectors in China, as well as the changes in trends during 2004–2007 and 2007–2011. From the sectoral distribution of IPCEI driving factor effects, the impact distribution of each driving factor on the carbon emission of each sector was found to be unbalanced, and its positive and negative effects were concentrated in a few sectors, such as mechanical equipment, electronic equipment, and metal products. Specifically, the most significant effects of per capita import on emissions occurred in the chemical, rubber and plastic products, and machinery and electronic equipment sectors, which were followed by the minerals, metals, and petroleum sectors. In terms of changes in trends, the effects of per capita import on the mineral, metals, and petroleum sectors were among the most significant, with an average increase of more than 180%. This indicates that the expansion of import scale in the resource and energy sectors promoted the flow of China’s embodied carbon emissions to other countries through trade, which was conducive to relieving the international pressure on China to reduce emissions, to some extent. Contrarily, the contribution of emission intensity to all the sectors was negative, and the factor recorded a strong impact in sectors S33, S41, and S40, indicating that technical improvements in the chemical, rubber, and plastic; mechanical; and electronic sectors played a crucial role in reducing carbon emissions.

[Fig. 7 here]

4 Conclusions

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Compared with the two aforementioned factors, changes in embodied carbon emissions caused by the production structure and demographic effects in various sectors in China were nearly zero, which indicates the negligible influence of these two factors on IPCEI. The import structure’s contribution varied from one sector to another. The import structure had strong positive effects in the sectors S18, S36, and S16 and strong negative effects in S35, S33, and S41. This suggests that an increase in the import shares of the minerals, metals, and petroleum sectors helps mitigate the increasing trend of domestic emissions, whereas a decrease in the import shares of ferrous metals; chemical, rubber, and plastic products; machinery and equipment, and electronic equipment sectors caused a decrease in embodied carbon emissions in import in the relevant sectors.

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By constructing an extensive EIO model based on technological heterogeneity, this study analyzed the intermediate carbon emission transfer effects of 140 countries/regions under the global production network and calculated and analyzed the carbon emissions embodied in China’s foreign trade, as well as its role and status in the transfer of international carbon emissions, based on data from the GTAP database. Further, we used the SDA method to decompose the carbon emissions embodied in foreign trade according to regional and sectoral dimensions to investigate the regional and sectoral heterogeneity of factors influencing IPCE in China. The study reached the following conclusions: First, the largest IPCE exporter in the global carbon transfer network is China, contributing approximately 1,523 t of carbon dioxide, followed by the United States, Russia, India, and Canada. Countries that import the highest volume of embodied carbon emissions are the United States, Japan, and BRIC countries. Developed countries accounted for the major share (68%), whereas developing countries accounted for 98% of net IPCE exports. This shows a gradual shift in carbon emissions from developed to developing countries, resulting in the latter becoming pollution havens. Second, China is a net importer of carbon in almost all bilateral partnerships, with the exception of partnerships with countries such as South Africa, Kazakhstan, Qatar, and Oman. The carbon emissions embodied in China’s exports are mainly concentrated in the United States, Japan, South Korea, and other regions, while the carbon emissions embodied in imports are concentrated in the United States, Russia, South Africa, India, and other countries. This shows that the regional flows of carbon emissions embodied in China’s trade were not balanced, which increases China’s burden of responsibility to transfer carbon emissions. Since the occurrence of the 2008 global

Journal Pre-proof financial crisis, the trade between developing regions and China has shown a strong growing trend in terms of the presence of embodied carbon, whereas the net carbon inflow and its share in the trade of developed regions with China has shown a downward trend. The overall SDA decomposition results attribute the growth of IPCEE in China to the increase in export per capita. Conversely, the main contributor to offset IPCEE growth was the emission intensity effect. Moreover, the emission intensity effect’s contribution decreased in the trade between China and developed regions, whereas it increased in the country’s trade with developing regions. The production structure’s contribution was completely reversed, such that it had a negative impact on IPCEE growth. This is largely the result of the transformation and upgrading of the industrial structure from a labor-intensive and resource-oriented structure to a capital- and technology-intensive one.

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Third, sectoral analysis reveals that the three sectors that cause the highest emissions in China but consume emissions in other countries were mechanical equipment; electronic equipment; and chemical, rubber, and plastic products. Meanwhile, NIPCE was found to be high in textile, clothing, and metal products sectors. Contrastingly, the main sectors driving the outflow of China’s carbon emissions were the mineral, oil, and oilseeds sectors, suggesting that their foreign trade helped relieve the international pressure on China to reduce carbon emissions. Based on the shares of embodied carbon in different sectors in different regions, we further identified the major regional flows of the important sectors contributing to the carbon emissions embodied in China’s trade. The results show that the carbon transfer in the sectors having the largest net inflow of emissions in China (mechanical equipment; electronic equipment; and chemical, rubber, and plastic sectors) was mainly derived from the trade processes between China and developed regions, including NOA, POECD, and WEU; for the sectors with the largest net emission outflows from China, the main destinations of outflows in the mineral sector were Latin America and the Caribbean, South Asia, and Sub-Saharan Africa. Those in the petroleum sector were EIT, MNA, and SSA regions, and those in the oilseed sector were Latin America and the Caribbean and North America.

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Fourth, the SDA decomposition results of different sectors revealed that the distribution of influence of various driving factors on sectoral carbon emissions was unbalanced, and the positive and negative effects were concentrated in a few sectors. The sectors with the most significant effects of IPCEE reduction caused by emission intensity were mechanical and electronic equipment and the chemical, rubber, and plastic products sectors. Significant improvements in emission efficiencies in these sectors played an important role in reducing their carbon emissions. Meanwhile, the expansion of the export scale had the strongest impact on IPCEE increase in heavy manufacturing and textile and clothing industries. Besides, the sectoral heterogeneity of the export structure effect indicated that an increase in the export proportion of mechanical equipment; ferrous metals; and chemical, rubber, and plastic products sectors strongly promoted IPCEE growth, whereas a decrease in the export proportion of electronic equipment, coal, textiles, and clothing sectors reduced embodied carbon emissions. For IPCEI, the expansion of import scale in the resource and energy sectors promoted China’s embodied carbon emissions to flow to other countries through trade, which helped relieve the pressure on China to reduce its carbon emissions, to some extent. Moreover, an increase in the import shares of the mineral, metals, and petroleum sectors helped mitigate the trend of increased domestic emissions, and a decrease in the import shares of ferrous metals; chemical, rubber, and plastic products; machinery and equipment, and electronic equipment sectors caused a decrease in the embodied carbon in import in related sectors. Based on these conclusions, this study proposes the following policy improvements: First, under the current trend of trade growth, China should actively optimize its foreign trade structure to realize domestic carbon emission reduction targets. From the perspective of the net transfer of emissions in various sectors, China should reduce the export proportions of heavy manufacturing, textile, and clothing industries and expand its import proportions in energy and the agricultural sector to meet relevant domestic demand. Further, the carbon transfer in S41, S40, and S33, which are the sectors with the largest net inflow of emissions in China, is derived from the trade process between China and developed regions. One of the reasons for the huge difference between China and the developed regions in the import and export volumes of embodied carbon in the aforementioned sectors is that China undertakes more carbon-intensive production and processing

Journal Pre-proof links while participating in the international division of labor than the developed regions. Therefore, Chinese enterprises can shift their business focus to research and development and marketing links, promoting low energy consumption and emissions, and gradually cultivate the technological and brand-based advantages to reduce the negative environmental externalities of participating in the international division of labor. Second, China should promote the introduction and development of low-carbon technologies. The SDA results reflect the feasibility and importance of emission intensity improvement and low-carbon technology development to achieve carbon emission reduction. Therefore, domestic enterprises should improve their levels of production technology and expand the use of energy-saving technology to reduce the carbon emission intensity of intermediate input and production. In particular, according to the SDA decomposition results, China should focus on energy conservation and emission reduction in key sectors, including heavy manufacturing and textile and clothing industries. Further, it should vigorously develop the energy conservation and environmental protection industries and accelerate the cultivation of new economic growth points in a low-carbon economy.

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Third, the regional and sectoral distribution results of embodied carbon emissions in China reveal that the carbon transfer destinations of sectors with high net emission outflows, such as energy, minerals, and primary agricultural products, are mainly concentrated in developing regions, which indicates the feasibility of realizing carbon emission reduction through South–South cooperation. Therefore, to the country should further strengthen complementary trade with developing countries, promote South–South cooperation in combating climate change, and give complete authority to the existing regional cooperation mechanism to achieve cooperative carbon emission reduction.

Appendix A. Supplementary data

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The additional figures and tables are listed in the supplementary material.

Journal Pre-proof References

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Journal Pre-proof Acknowledgments This work was jointly supported by the Program for Projects in Philosophy and Social Science Research of the Ministry of Education of China (Grant No. 16YJC630123)

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and the National Natural Science Foundation of China (Grant No. 71601170).

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Conflict of Interest Statement

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This manuscript has not been published or presented elsewhere in part or in entirety and is not under consideration by another journal. We have read and understood your journal’s policies, and we believe that neither the manuscript nor the study violates any of these. There are no conflicts of interest to declare.

Journal Pre-proof Fig. 1 Changes in net emission flows embodied in trade (emissions embodied in exports minus emissions embodied in imports) between China and 139 countries/regions. Arrows in each panel show the top-7 transfers of embodied emissions in 2004 (a), 2007 (b), and 2011 (c). The yellow arrows indicate that net emission outflows reversed between 2004 and 2012, while the red arrows imply that net emission inflows reversed between 2004 and 2012. Fig. 2 Contributions of different factors to changes in emissions embodied in Chinese exports during 2004–2007 and 2007–2011. The black dots indicate the total effects of five driving factors. Fig. 3 Contributions of different factors to changes in emissions embodied in Chinese imports during 2004–2007 and 2007–2011. The black dots indicate the total effects of five driving factors. Fig. 4 Sectoral contributions to emissions embodied in China’s exports to major regions in 2004, 2007, and 2011 (Mt).

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Fig. 5 Sectoral contributions to emissions embodied in China’s imports from major regions in 2004, 2007, and 2011 (Mt). Fig. 6 The sectoral distribution of contributions of driving factors to emissions embodied in Chinese exports during (a) 2004–2007, (b) 2007–2011 (Mt). Fig. 7 The sectoral distribution of contributions of driving factors to emissions embodied in Chinese imports during (a) 2004–2007, (b) 2007–2011 (Mt).

Journal Pre-proof Table 1 Emissions embodied in exports and imports for the top-15 countries/regions in 2011. Emissions embodied in exports

Emissions embodied in imports

Country

Country (Mt)

(Mt)

1523.103

755.615

CHN

USA (31.378%)

(13.959%)

552.770

353.602

USA

CHN (11.388%)

(6.532%)

303.810

322.473

RUS

JPN

of

(6.259%)

ro

224.410 IND

-p

146.330 CAN

(2.693%)

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na

129.867

lP

130.743 DEU

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190.066

171.170 FRA (3.162%) 161.210 IND

(2.102%)

(2.978%)

100.537

158.443 ITA

(2.071%)

(2.927%)

72.336 MEX

(3.737%)

(3.511%)

102.010

141.277 CAN

(1.490%)

(2.610%)

70.728 IRN

103.212 RUS

(1.457%)

(1.907%)

70.264 THA

99.688 MEX

(1.448%) SAU

202.297

GBR

(2.675%)

AUS

(5.638%)

KOR

(3.015%)

KAZ

305.195

DEU (4.623%)

ZAF

(5.957%)

65.378

(1.842%) BRA

94.598

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(1.748%)

61.453

89.468

JPN

BEL (1.266%)

(1.653%)

58.269

87.852

POL

ESP (1.623%)

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(1.200%)

Journal Pre-proof Graphical abstract

What Drives the Transfer of Carbon Emissions in China? An Analysis of International Trade from 2004 to 2011 Highlights 

International division of labor has led to transfer of carbon emissions via trade

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Emissions transfer through import and export of intermediate products was

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of

studied We conducted structural decomposition analysis of trade data from 140 world

ro

regions

Emission intensity plays an important role in the machinery industry



Export per capita haspositive effects on emission reduction in heavy

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

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manufacturing

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