China Population, Resources and Environment, 2019, Issue 7

Authors: LV Yue, LV Yunlong

Abstract This paper measures the degree of global value chain embedment and embodied carbon in trade between China and 38trading partners, and then does empirical research on the environmental effect of GVC’s embedment. First, we find that embedment in global value chains significantly reduces the industry’s embodied carbon in trade and the effect is larger in non-polluting intensive, high degree of foreign investment and technology intensive industries. Second, quantile regression shows that as the value chain embedded increase, the improvement effect is more prominent. Finally, the improvement effect is mainly derived from the forward linkages, while backward linkages play a negative role. In other words, improving the indirect value-added exports will be helpful for the improvement of environment, but the decrease of domestic value added in gross exports worsens the environment.

Key words: global value chain; embodied carbon in trade; input output model; environmental effect