Implementation of the EU carbon border adjustment mechanism and China's policy and legal responses

Abstract

As a major global manufacturer and exporter of raw materials, China may not be significantly affected by the implementation of the EU Carbon Border Adjustment Mechanism (CBAM) in the short term. However, as other developed economies follow and continuously expand the mechanism coverage of industries, it may have widespread and far-reaching implications for exports of related products from developing countries. In light of the global shift towards green and low-carbon transformation, China must effectively address the CBAM by speeding up the promotion of green and low-carbon initiatives through enhanced policies and legal frameworks. This requires addressing issues such as comprehensive supervision challenges in the carbon footprint of supply chain systems, incomplete policy mechanisms such as carbon pricing, inadequate legal systems and standards, and challenges in policy enforcement and coordination. To address these issues, this paper proposes enhancing carbon emission management systems, gradually expanding the scope of China's carbon emission trading, and promoting data transparency. Legislation and institutional arrangements for internalizing low-carbon costs should also be strengthened, to promote low-carbon development in all industries, setting specific low-carbon targets and requirements for production and operations.