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Trade and environment: evidence from China's manufacturing sector

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  • Joseph C. H. Chai

    (University of Queensland, Australia)

Abstract

This paper focusing on the Chinese manufacturing sector assesses the environmental impact of trade liberalization in China. The results show that China's experience with the trade liberalization-environment nexus is consistent with international evidence. On one hand, trade liberalization has had various positive effects on the environment. Firstly, it promoted specialization in areas of comparative advantage, which, in general, included industries that contributed less to environmental degradation. Secondly, it allowed China to access and adopt the best international practices in pollution abatement technology. Thirdly, it enabled China to transfer environmental costs to other countries by importing intermediate products whose production contributed to environmental degradation. On the other hand, these positive effects were overwhelmed by a negative scale effect, which was the result of a huge increase in the demand for Chinese exports. The paper concludes that if China is to prevent pollution from reaching a critical threshold, environmental regulations need to be tightened. Copyright © 2002 John Wiley & Sons, Ltd. and ERP Environment.

Suggested Citation

  • Joseph C. H. Chai, 2002. "Trade and environment: evidence from China's manufacturing sector," Sustainable Development, John Wiley & Sons, Ltd., vol. 10(1), pages 25-35.
    • Handle: RePEc:wly:sustdv:v:10:y:2002:i:1:p:25-35
    DOI: 10.1002/sd.174
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    References listed on IDEAS

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    1. Lee, Hiro & Roland-Holst, David, 1997. "The environment and welfare implications of trade and tax policy," Journal of Development Economics, Elsevier, vol. 52(1), pages 65-82, February.
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    Cited by:

    1. Jayanthakumaran, Kankesu & Liu, Ying, 2012. "Openness and the Environmental Kuznets Curve: Evidence from China," Economic Modelling, Elsevier, vol. 29(3), pages 566-576.

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