Influences of Border Carbon Adjustments on China＇s Foreign Trade

The EU, the United States and other economies, with the intention to implement unilateral trade measures Border Car- bon Adjustments, impose emission reduction pressure on develop- ing countries. Once implemented, the measures will have great im- pact on China＇s foreign trade. Using the input-output table in 2007, this paper had analyzed the influences on China＇s foreign trade as a whole and sub-sectors in three tax rates scenarios. The results showed that the tariff level of China＇s exports will increase by 3.6%-6.3% if the tax was levied on exports embodied emissions, and by 1.0%-1.7% if levied on export direct emissions. In 2007, the former total amount of carbon tax was about US$42.6-73.0 billion, 4 times that of the latter. Based on export embodied emis- sions, sectors largely influenced were non-traditional energy in- tensive ones, such as textile, et al. These sectors should be encour- aged to carry out industrial upgrading, raising the value-added of export goods, and reducing their embodied emissions by reductionof energy intensity. Taking into account of the complexity of data collection, the tax levied on products direct emission is more op- erational. The results showed that the five top sectors most affected were other chemical materials, processing of petroleum and nucle- ar fuel, coking, smelting and rolling of ferrous metal and textile. Most of them were energy intensive sectors. Therefore, adjusting export products structure, and controlling too fast development of energy intensive industries are also important strategies in China.