An Empirical Evidences On The Effect Of Environmental Constraints Upon The Current Account

Currently, it is very important for the Governments to keep the environment and economic growth in balance in the process of economic globalization.As one of the most important developing countries in the world,the current account of China keep surplus,economic of China grows very rapid with it’s opening trade policy.However, we neglect the relationship between environment and trade policy. The developed countries use climate change as excuse to take unilateral trade protection measures. On the way of sustainable development, Chinese government decided developing "low-carbon economy". Therefore, the relationship between environment and the current account becomes one of the most important factors of the sustainable growth of the global economy.Firstly, we summarize the research on the impact of domestic and foreign environmental constraints on the current account. Then we analyze positive and negative effects on the current account of Environmental constraints. The relationship with environmental constraints and the current account depends on the cost and innovate.Whether the resource and environmental constraints adversely affect a country’s current account? Based on the panel data of17years from1994-2010,34developed countries and21developing countries experience analysis we found that the effect of developed countries’ carbon emissions intensity on the current account balance is negative, and the developing countries’ effect is positive. The impact of environmental factors on the current account balance depends on the relative size of the cost-effectiveness, the effect of differentiated and innovative compensation. With higher technical level of developed countries, the increase in the cost of environmental constraints digestion through product innovation, technological innovation and management innovation; while in developing countries, most industries are labor-intensive and resource-intensive, the ability to deal with pollution is not strong. With the low level of technology, the developing countries have a negative impact on the current account.As an export-oriented developing country, Chinese environmental constraints on China’s current account have important policy implications. The empirical results of China’s inter-provincial panel data show that carbon emission intensity has a significant effect on net trade in China’s eastern, central and western. This shows that the environmental constraints (reduction of carbon intensity) will reduce the current account balance, there is a certain degree of inhibition of conversion of environmental policy on the current account of China, but also conducive to China’s internal and external balance of the economy, achieve the coordinated development of resource environment and social-economic.At present, facing of deteriorating environmental changes, how to deal with relationship between the environment and the current account balance is an important issue in the process of sustainable development.