Influence of carbon tariffs on China’s export trade

Sheng, Yijie; Wang, Qian

Influence of carbon tariffs on China’s export trade

2022

Sheng, Yijie | Wang, Qian

The database of the Global Trade Analysis Project (GTAP) and its energy–environmental model, known as GTAP-E, are used in this study to simulate the effect of the simultaneous and separate carbon tariff impositions of EU, the USA, and Japan on the export and export structure in China. Simulation results show that the carbon tariff impositions of developed countries on China will decrease the export to EU, the USA, and Japan but increase the export of China to other countries associated with the trade diversion in China. The USA and EU impose carbon tariffs on China, which will have a serious impact on China’s export trade, especially for the export trade of energy-intensive industries. When Japan imposes carbon tariff on the exports of China, the positive influence on the export trade is weaker compared to the situation that the USA and EU imposed on China. Furthermore, imposing carbon tariffs on China will improve its trade structure; promote its agriculture, petroleum, and natural gas exploration and electricity industries; reduce its export trade volume of coal mining, petroleum products, and energy-intensive and other industries; decrease the export trade share of energy-intensive industries; and increase the export trade share and services of other industries. In this regard, China should reduce the carbon content of export products initiatively. On the one hand, China can solve this problem by levying carbon tax, developing emerging industries, and strengthening the research and development of low-carbon technologies. On the other hand, China should actively participate in the formulation of international standards of carbon tariff and become a participant in the international emission reduction rules in the field of climate change.

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