Carbon Embedded in China's Trade
SEI US Working Paper, WP-US0906
Climate Mitigation Policy
A large fraction of China's greenhouse gas emissions are incurred in order to satisfy final demand of consumers in other countries; in effect, carbon emissions are embedded in China's exports. This paper explores the economic context and policy implications of carbon embedded in China's trade. China is a net exporter of embedded carbon because its entire economy is carbon-intensive; if China had its current trade patterns but U.S. carbon intensities in every sector, its net export of embedded carbon would disappear. China's success in trade is based on labor costs, not carbon emissions; there is literally no correlation between carbon intensity and revealed comparative advantage within the Chinese economy today.