The role of CO2 embodiment in US–China trade

This study examines the influence of US–China trade on national and global emissions of carbon dioxide (CO2). The three basic questions are as follows: (1) What amount of CO2 emissions is avoided in the US by importing Chinese goods? (2) How much are CO2 emissions in China increased as a result of the production of goods for export to the US? and (3) What are the impacts of US–China trade on global CO2 emissions? Our initial findings reveal that during 1997–2003: (1) US CO2 emissions would have increased from 3% to 6% if the goods imported from China had been produced in the US, (2) About 7%–14% of Chinaʹs current CO2 emissions were a result of producing exports for US consumers, and (3) US–China trade has increased global CO2 emissions by an estimated 720 million metric tons. We suggest that the export of US technologies and expertise related to clean production and energy efficiency to China could be a “win–win” strategy for both countries for reducing their trade imbalance and mitigating global CO2 emissions. Improved international accounting methodologies for assigning responsibility for CO2 emissions must be designed to account for the dynamic nature of international trade.