China's Foreign Trade, Energy And Environmental Impact

China's rapidly growing economy and its extensive economic operation require significant energy and environment resources inputs, which have become the severe constraints to sustainable development. Under the background of globalization, the energy and environment impacts of international trade have made the problem more complex. International trade is characterized not only by the flow of capital and goods, but also by the energy and emissions embodied in goods during their production. Thus, improving our understanding of the international trade influences on China's energy and environment situation will help to find a better way to balance the energy and environment pressure with the benefits of our country in globalization.Traditional analysis on trade and environment has investigated the mechanism of trade influences on environment, but failed to make out the real environment impacts induced by trade. The application of input output analysis method in the field of energy and environment analysis, and the extending researches on climate change, have led to large numbers of analyses on energy embodied in international trade and on the balance of emissions embodied in trade (BEET). Since there is no standard and universally accepted method for those analyses, the accounting results largely depend on the processing method. Some unreasonably or randomly processing method has given rise to the difference of those results. As to the BEET, most researches focus on the discussion of emissions reduction responsibility, which is actually the work for climate change negotiations. Thus a comprehensive accounting of embodied energy and embodied emissions in international trade as well as a better understanding of its impact are necessary for our country to sacrifice less energy and environmental resources for more benefits.Based on the improvement of the traditional framework of embodied energy and embodied emissions analysis, this paper has calculated the energy and emissions embodied in China's international trade during 1997-2006, as well as its influences on China's energy and emissions situation, which features two innovations:First, based on the "virtual import country" assumption, a relatively new and simple framework for embodied flow analysis has been proposed, which helps to simplify the calculation of embodied flow in imports from various countries. Here embodied flow is a compound concept for embodied energy and embodied emissions as well as other resources with embodied meanings, and it indicates the direct and indirect resources inputs in product supply. Based on the "virtual import country" assumption, the simple technological coefficient choosing method has also been put forward. This new framework has made up for the deficiency of "homogeneity assumption" and "import substitution assumption" as well as other randomly technological coefficient choosing method in traditional analysis, and it is also simpler and more flexible than the multi-regional input output analysis. The main point for this framework is to assume the existence of a virtual country, from which all the imports come, thus the technological coefficient of this virtual country can be used to calculate the embodied flow in imports. And a country within the main import partners, whose energy intensity (or other indexes) is closest to the average energy intensity of all the imports, thus this country can be treated as the "virtual import country".Second, this paper has tried to extend the traditional framework for embodied emissions analysis to cover both the emissions from energy consumption and those from industrial process, the latter has usually been neglected in the traditional analysis of embodied emissions.According to the new framework, Taiwan can be treated as the "virtual import country (partner)" for our country. Thus the technological coefficient of Taiwan can be used to calculate the embodied energy and embodied emissions in imports. The results of embodied emissions analysis show that most of the CO₂ emissions from industrial process are consumed in China, few are exported through trades. Emissions from energy consumption take charge in embodied emissions export. Thus the change of embodied emissions and its impacts are similar to those of embodied energy.The results show that though the energy and emissions embodied in imports increases faster than those in exports, China is a net exporter for both embodied energy and embodied emissions, and the scale of net export is becoming larger since the energy and emissions embodied in exports is much bigger than those in imports. The large export of embodied energy and embodied emissions in international trade has given rise to the energy and environment pressure of China. The embodied energy in exports has accounted for 34.18% of China's total energy consumption in 2006, and the net export also comes up to 26.31%. Similarly, 32.73% of the total CO₂ emissions in China are actually embodied in exports and serves for those foreign countries, and 26.09% of the total emissions are for net export.Large proportions of China's energy consumption and CO₂ emissions are embodied in China's export and net export, which finally serve for foreign countries and increase the energy and environment pressure of China, thus comes to a problem of how to look on the energy and emission embodied in international trade and its impacts.This paper has tried to put forward a new view on the understanding of it. Emissions can be regarded as the consumption of some environment resource, thus the large export of embodied energy and emissions can be taken as the indirect export of some resources. In the background of globalization, it is more important to understand whether the large export of embodied energy and embodied emissions has brought about more benefits for our country. So this paper has proposed to take the energy and emissions embodied in exports as the resource inputs of exports, and take the GDP and employment supply induced by exports as the outputs of exports, then analyze the GDP effects and employment effects of embodied energy and embodied emissions inputs to find out whether export is more beneficial for China.The analysis indicates that more energy and environment resources inputs will be needed to bring about employment growth through exports extending with the year. As compared to domestic consumptions, exports require more energy and environmental resources inputs to produce per unit GDP or per unit employment. So the current trade pattern is not best for China to get more benefits with fewer inputs in globalization.Thus it is necessary and also possible to release the energy and environment pressure of China through international trade. In order to find out the sources of those pressure, this paper has investigated the factors that affect the embodied energy in exports, and has also conducted a factors analysis on the net export of embodied energy of China which has few been done.It is found that scale effect is the main reason for the extending export of embodied energy. And the main reason for China to be a net exporter of embodied energy lies in the technique effect gap, which means the difference of comprehensive energy consumption per production value. Further study suggests that the low value added of China's product is the crucial reason for the technique effect gap. And this is because China has been situated in the manufacturing and processing part with low value added in the global industrial chains. From the view of "smile curve", this structure problem is also emphasized as the main reason for the low benefits and high inputs of China's exports, which leads to the dependence on product numbers of trade, and thus increases the energy and environment pressure.It is concluded that the large export and net export of embodied energy and embodied emissions in China's international trade is not a problem of scale, nor a problem of technique, but a problem of structure. The trade growth pattern under the GDP orientation contributes most to the structure problem. In order to better balance the energy and environment pressure with country benefits, the trade growth pattern needs to change from GDP orientation to employment orientation, and more attentions should be paid to the human capital investment. The trade structure adjustment needs to change from the structure adjustment of product to the vertically extension in the industrial chains for higher valued added. And such a structure adjustment calls for a stronger domestic market in globalization.