Low-carbon Economy And The Relationship Between China's Export Trade

The 15th contracting party conference for UNFCCC (United Nations Framework Convention on Climate Change) was held in Copenhagen during December 7th-18th,2009. Following the Kyoto Protocol, it is another greatly significant agreement on the global climate, which implies that the international mechanism for carbon emission reduction is to be established in the post-Kyoto-Protocol era. As the low-carbon economy approaches, China is faced with not only a severe challenge but also a good opportunity. Since the economic reform, China's carbon dioxide emission has skyrocketed with the rapid growth in the population, economy and energy consumption. China has become the country second to US in carbon emission in 2002. Besides, the expansion of the export trade has aggravated the situation. Therefore, it is urgent for us to develop the low-carbon economy. Nevertheless, some questions remain to be answered:What is its influence on the China's export trade? In what way do the different emission reduction mechanisms affect the comparative advantage and the international competitiveness of China's export products? What is the most appropriate scheme for the China's carbon emission reduction?With the methodology of theoretical and empirical analysis, this paper on the one hand gives the analysis on the situation and the determinants of China's carbon emission as well as the concept and theory related to the low-carbon economy, which supplies data and theory support in order to find out the theoretical transmission mechanism of the emission reduction regulations to the international trade; on the other hand, it analyzes the correlation between the carbon emission and the export trade as well as calculates the embodied carbon in the import and export with the help of cointegration, Granger causality and input-output model. By taking into account the effect of the carbon tax on the China's carbon dioxide emission and export trade, this paper leads to the following conclusions:(1) From 1978 to 2007, there exists long-term equilibrium and short-term fluctuation in the correlation between China's carbon emission and export trade, and the export trade expansion is the Granger cause of the carbon emission growth;(2) In the short run, emission reduction cost turns into the production cost in the form of factor input, thus increasing the producing cost and weakening the comparative advantage and the international competitiveness. In the long run, however, reduction regulations may encourage the technology innovation, which enhances the product competitiveness;(3)Taking examples from Denmark, we are supposed to study and improve the environmental tax system, fix the appropriate carbon tax with a low rate, utilize the dual-dividend effect of carbon tax, and make the carbon tax system work together with the carbon emission permits trade in order to develop the low-carbon economy.