Revisiting the Global Net Carbon Dioxide Emission Transfers by International Trade:The Impact of Trade Heterogeneity of China

To revisit global net carbon dioxide (CO2) emissions transfers by international trade for year 2007, this study employs a new world-wide, multiregional input-output (MRIO) table in which China's production is separated into domestic use, processing exports, and nonprocessing exports. The results show that processing exports in China involves relatively lower CO2 emissions than other production types for the same output levels. Therefore, if processing exports are not appropriately distinguished, net CO2 emission exports from China to other regions will be distorted; the relative bias occasionally reaches 15%. Net emission exports from regions other than China are also distorted, particularly for regions that use considerable Chinese processing exports as intermediates, such as the United States, European Union (EU), and East Asia. Given that processing exports prevail in a large number of developing countries, such as Mexico and Vietnam, one should carefully interpret measurements of net emission transfers by international trade by utilizing the ordinary world-wide MRIO model.