Carbon Embedded in China’s Trade

The paper analyzes carbon embedded in China's trade using a Multi-Region Input-Output (MRIO) model. It finds that while China is a net exporter of embedded carbon, this is due to the overall carbon intensity of its economy rather than the specific composition of its exports. The author demonstrates that there is no correlation between revealed comparative advantage and carbon intensity in the Chinese economy. Consequently, the paper argues that border tax adjustments on carbon-intensive imports would have minimal impact on China's trade success and limited benefit for developed countries. Finally, it discusses the theoretical and practical implications of harmonized global carbon prices, suggesting they could enable developing countries to 'leapfrog' to cleaner technologies if supported by public investment.

• China's status as a net exporter of embedded carbon is driven by the general carbon intensity of its entire economy rather than the specific types of goods it exports. If China's industries operated at the same carbon intensity as those in the United States, its net export of embedded carbon would effectively disappear, even if trade volumes remained the same.
• There is no correlation between a sector's carbon intensity and China's revealed comparative advantage (RCA). China's success in international trade is primarily attributed to low labor costs and government policy rather than the availability of low-cost carbon emissions.
• Of the 13 sectors where China possesses a revealed comparative advantage, the most significant are manufacturing (electronics, machinery, textiles, apparel, and leather products). With the exception of the coal industry, these successful export sectors are not extraordinarily carbon-intensive.
• Border tax adjustments (BTAs) targeting carbon-intensive imports would have little effect on China because its comparative advantage does not reside in the energy-intensive materials industries most susceptible to such taxes. Among the six primary energy-intensive manufacturing sectors, China only has a revealed comparative advantage in non-metallic mineral products (including cement).
• A globally harmonized carbon price is not theoretically necessary for equitable climate policy, as equal prices would represent a greater loss of human welfare in low-income countries than in high-income countries.
• While a global carbon price could create obstacles by encouraging 'carbon-allowance-seeking' investments, it also provides an opportunity for developing countries to 'leapfrog' existing high-income country technologies and lead in sustainable innovation, provided there is strong government policy and public investment.

APA

Ackerman, F. (2009). Carbon Embedded in China’s Trade. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/Climate/carbon-china-trade.pdf

Chicago

Ackerman, Frank. Carbon Embedded in China’s Trade. Stockholm Environment Institute, 2009. https://www.sei.org/mediamanager/documents/Publications/Climate/carbon-china-trade.pdf.

Wikipedia

{{cite report |last1=Ackerman |first1=Frank |title=Carbon Embedded in China’s Trade |publisher=Stockholm Environment Institute |date=16 June 2009 |url=https://www.sei.org/mediamanager/documents/Publications/Climate/carbon-china-trade.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ackerman2009carbon, author = {Ackerman, Frank}, title = {{Carbon Embedded in China’s Trade}}, institution = {Stockholm Environment Institute}, year = {2009}, month = jun, url = {https://www.sei.org/mediamanager/documents/Publications/Climate/carbon-china-trade.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }