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Study on Environmental Effects of China’s Foreign Trade

Author: HuShuaiWei
Tutor: ZhangHaiYang
School: Zhejiang University of Finance
Course: Industrial Economics
Keywords: foreign tread environmental effects co-integration test embodied pollution structural decomposition analysis
CLC: F224
Type: Master's thesis
Year: 2012
Downloads: 255
Quote: 0
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Abstract


Under the premise of discussing the existing theories of environmental effect of international trade, first, this paper discussed the current situation of China’s foreign tread and environmental pollution; second, this paper used dynamic econometric methods, such as Co-integration test based on the VAR model, Granger-causality test, impulse response function analysis and variance decomposition analysis based on the foundation of VEC model, to explore the long-term relationship among China’s import, export, the growth of industrial and environmental pollution, the influence and response of short-term fluctuations has also been discussed; third, according to the improved environmental input-output model,this paper separated the intermediate inputs imported and domestic, then, discussed the embodied pollution of import, export and foreign tread of the major industrial profession by quantitative analysis method, especially discussed the substitution effects of imported intermediate inputs to domestic environmental pollution 2002-2009, which also analyzed China’s pollution terms of trade; finally, according to the improved structural decomposition analysis, this paper analyzed the embodied pollution of the export of each industry and the total export.The studies suggests that export may increase the domestic environmental pollution over the long term,but import may have different effects to different pollutants, beyond that, export and import have different effects at different stages, also with different pollutants. Variance decomposition analysis that based on VEC model shows that import and the growth of industrial economy may have abatement effects (except industrial waste water), while except will increase the domestic environmental burden. And among the various factors that affect environmental pollution, export plays a most important role, import followed.Quantitative analysis shows that embodied pollution of import exceeded export 2002-2004, we know that foreign tread improved the domestic environment, but export exceeded import since 2005, foreign tread increased the burden on the domestic environment. And the analysis of pollution terms of trade shows that China’s pollution terms of trade is conducive to improve the environmental situation. Structural decomposition analysis shows that the total effect is positive from 2003 to 2007, this is mainly because compared with the rapid expansion of trade, the progress of production technologies and environmental pollution control techniques has not kept the pace. The total effect began to appear negative until 2008, the negative overall effect reflects that on the one hand the scale of foreign trade expansion has been slowed down, but even more important, it reflects a certain degree of progress of production technologies and environmental pollution control techniques.

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