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Abstract
China’s capital-intensive, export-oriented, spectacular economic growth since launching
its open-door policy and economic reforms in late 1978 not only has created jobs and
has lifted millions of the Chinese people out of poverty, but also has given rise to
unprecedented environmental pollution and CO2 emissions. While estimates of the
embedded CO2 emissions in China’s trade differ, both single country studies for China
and global studies show a hefty chunk of China’s CO2 emissions embedded in trade. This
portion of CO2 emissions had helped to turn China into the world’s largest carbon
emitter, and is further widening its gap with the second largest emitter. This raises the
issue of who should be responsible for this portion of emissions and bearing the carbon
cost of exports. China certainly wants importers to cover some, if not all, of that costs.
While China’s stance is understandable, this paper has argued from a broad and
balanced perspective that if this is pushed too far, it will not help to find solutions to this
issue. On the contrary it can be to China’s disadvantage for a number of reasons.
However, aligning this responsibility with China does not necessarily suggest the sole
reliance on domestic actions. In that context, the paper recommends specific actions
that need to be taken internationally as well as domestically in order to effectively
control the embedded CO2 emissions in China’s trade.