An exploration of the effect of Belt and Road Initiative on carbon emissions embodied in China's manufacturing industry exports.

Abstract

This study evaluates the impact of China's Belt and Road Initiative (BRI) on direct and indirect carbon emissions from China's manufacturing goods production and trade processes with 64 countries along the belt and road (B&R). The analysis is based on China's 189 trading partners (countries and regions) and 26 industrial sectors using the Eora Global Multi-Regional Input-Output Database for 2001-2016 and the difference-in-differences method. The results indicate that to most countries along the B&R, the carbon emissions embodied in China's manufacturing industry exports exceed import-carbon emissions. Energy and heavy industries are the main net exporters of carbon emissions. It is noted that the BRI significantly increases the carbon emissions embodied in China's manufacturing exports. The BRI's effect is more obvious in energy and heavy manufacturing, in Maritime Silk Road countries and in developing countries along the B&R. While the BRI fosters carbon emissions embodied in China's manufacturing exports by promoting export volume, and reduces them by promoting low-carbon technological innovation, improving China's relative position in the global value chain in the region does not affect carbon emissions embodied in China's manufacturing exports. Our findings lead to several important policy implications at a time when the region is experiencing enormous challenges in reducing CO2 emissions.