Carbon Embedded in China’s Trade

This research paper analyzes the relationship between China's trade success and its carbon emissions, arguing that China's comparative advantage is based on labor costs rather than carbon intensity. The author contends that border tax adjustments on carbon-intensive imports would have minimal impact on China's economy and suggests that a global carbon price could provide an opportunity for China to lead in sustainable technologies.

• China is a net exporter of embedded carbon primarily because its overall economy is carbon-intensive, not because it exports uniquely carbon-intensive products. If China's industries had the same carbon intensities as those in the United States, its net export of embedded carbon would almost disappear, even while maintaining its monetary trade surplus.
• There is no correlation between China's revealed comparative advantage (RCA) and its carbon intensity. China's success in world trade is driven by factors such as low-cost labor and government policy rather than low-cost carbon emissions.
• Of the 13 sectors where China has a revealed comparative advantage, the top three (electronics, machinery and equipment nec, and manufactures nec) account for 44 percent of exports and are not extraordinarily carbon-intensive. The most carbon-intensive sectors in China, such as energy and certain agricultural sectors, account for less than 1 percent of the dollar value of exports.
• Border tax adjustments (BTAs) targeting energy-intensive, internationally competitive industries would have little effect on China. Among the six primary energy-intensive manufacturing sectors (petroleum refining, chemicals and plastics, pulp and paper, nonmetallic mineral products, ferrous metals, and non-ferrous metals), China only has a revealed comparative advantage in non-metallic mineral products.
• While a globally harmonized carbon price would increase costs for China's carbon-intensive industries, it could create a market opportunity for China to "leapfrog" existing technologies in high-income countries and lead in sustainable technological development, provided there is strong government policy and public investment.
• The theoretical argument for a single global carbon price assumes that the world income distribution is equitable. In reality, a fixed price represents a larger loss of human welfare in low-income countries than in high-income countries, suggesting that higher carbon prices in richer countries would be required for an equitable distribution of abatement costs.

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} }