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Trade and Environment: Evidence from China's Manufacturing Sector

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  • Chai, Joseph C.H.

Abstract

This paper uses the manufacturing sector in China to consider whether globalization of the Chinese economy over the past two decades has contributed to the decline in environmental conditions. 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.

Suggested Citation

  • Chai, Joseph C.H., 2000. "Trade and Environment: Evidence from China's Manufacturing Sector," Economics, Ecology and Environment Working Papers 48005, University of Queensland, School of Economics.
    • Handle: RePEc:ags:uqseee:48005
    DOI: 10.22004/ag.econ.48005
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    References listed on IDEAS

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    1. John Beghin & Michel Potier, 1997. "Effects of Trade Liberalisation on the Environment in the Manufacturing Sector," The World Economy, Wiley Blackwell, vol. 20(4), pages 435-456, July.
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    Cited by:

    1. Chai, Joseph C.H., 2000. "Environmental Impact of China's Accession to WTO in the Manufacturing Sector," Economics, Ecology and Environment Working Papers 48010, University of Queensland, School of Economics.

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    Environmental Economics and Policy;

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