Carbon Tariff May Reduce The Export Of China'S Clothing Industrial Products

China is not only the largest developing country, but also an important manufacturing export country. According to the current economic development pattern, if European and American countries implement carbon tariff policies around 2020, it may have a serious impact on the international competitiveness of China's manufacturing industry. The carbon tariff proposal originated from the EU, which is intended to impose special carbon dioxide emission tariffs on imports from countries that have not fulfilled the Kyoto Protocol, in order to eliminate unfair competition that may be suffered by carbon intensive products in EU countries. The initial proposal of the EU on carbon tariff policy is to a large extent directly aimed at countries such as the United States and Australia that refuse to join the Kyoto Protocol (Australia signed it in December 2007), but also includes major developing countries such as China and India that have not undertaken binding greenhouse gas emission reduction targets. ??

On June 26, 2009, the 2009 Clean Energy Security Act passed by the House of Representatives of the United States Congress proposed that carbon tariffs would be imposed from 2020. The goal of the US carbon tariff proposal is very clear, which is to use it to impose trade sanctions through punitive tariffs on major developing countries such as China and India that have not undertaken binding emission reduction targets. On November 24, 2009, the French government proposed to impose carbon tariffs on imports from developing countries whose environmental protection legislation is less stringent than that of the EU from January 1, 2010, in an attempt to exert political pressure on developing countries in advance of the United Nations Climate Change Conference in Copenhagen.

Although the bill of the United States has not yet been finally passed, and the proposal of France has also been unanimously opposed by other EU member states, the tough stance of European and American developed countries to force China, India and other major developing countries to undertake binding emission reduction targets at the Copenhagen Climate Change Conference, and the result of the Conference's failure to reach a legally binding consensus agreement, It indicates that international disputes on climate change will become more intense in the future. The carbon tariff proposal of European and American countries means that climate negotiations may lead to more serious international trade disputes in the future.

China is not only the largest developing country, but also an important manufacturing export country. According to the current economic development pattern, if European and American countries implement carbon tariff policies around 2020, it may have a serious impact on the international competitiveness of China's manufacturing industry. To this end, it is necessary to conduct a prudent assessment of its possible impact in order to find an effective response strategy.

　　 The pattern of high energy consumption and high emissions faces challenges

Based on a comprehensive analysis of the carbon tariff collection plans proposed or to be implemented by European and American countries, we believe that if developed countries implement carbon tariffs around 2020, their carbon tariff collection level is likely to be around 30 – 60 dollars/ton of carbon. China will be the main target of European and American carbon tariff policies. What is not optimistic is that from the performance of European and American countries in the Copenhagen Conference, the policy proposal of carbon tariffs may lead to the following behavior of some other countries in the future, just like the RMB exchange rate and anti-dumping litigation.

The problem China faces is that its industrial development is characterized by high energy consumption, high emissions, high investment and high exports. Since the reform and opening up, China's total industrial output has grown by 11.2%, industrial capital stock by 9.2%, industrial energy consumption and carbon dioxide emissions by 6% and 6.3% respectively; Industrial GDP accounts for about 40.1% of the total GDP of the country, but industrial energy consumption accounts for 67.9% of the total energy consumption of the country, and industrial carbon dioxide emissions account for 83.1% of the total carbon dioxide emissions of the country. Research shows that about 23% of China's carbon emissions in 2004 were caused by net exports. As the carbon tariff proposal may target many manufacturing industries with a high proportion of exports, rather than specific products like anti-dumping duties, its impact may be more serious than that of insurance or anti-dumping.

The estimation results by industry show that the implied carbon emissions per 10000 yuan of output of several industries with relatively high export share, such as communication and electronic equipment, electrical and mechanical equipment, textile industry, garment, leather and down products processing industry, and chemical industry, are 2.5 – 5.5 tons of carbon respectively. Based on the carbon tariff rate of US $30 – 60 per ton of carbon, it is equivalent to that 6% – 14% or even 12% – 28% tariffs will be levied on every 10000 yuan of output value exported. It is worth noting that the carbon tariff rate of $60 per ton of carbon is close to or even more than the anti-dumping tax on some export products. For example, in August 2006, the EU proposed an anti-dumping tax rate of 16.5% on Chinese leather shoes, and in June 2009, the highest anti-dumping tax rate on Chinese aluminum alloy wheels was 33%; In the three-year special tariff scheme proposed by the United States in June 2009 for Chinese tires, the additional tariffs levied in the first to third years were 55%, 45% and 35% respectively.

　　 Carbon tariffs may reduce China's industrial exports by 3% – 7%

The dynamic CGE model is used to simulate the production, export and employment of 15 industrial product production sectors under the carbon tariff scenarios of $30 and $60. The results show that under the carbon tariff standard of $30, industrial product exports in the first year decreased by 3.53%, total output decreased by 0.62%, exports in the second year decreased by 3.01%, and total output decreased by 0.49%; Under the standard of US $60, the export in the first year decreased by 6.95%, the total output decreased by 1.22%, and the export in the second year decreased by 5.97%, and the total output decreased by 0.97%. Under the standard of US $30, it will take more than 5 years for China's manufacturing industry to gradually absorb the negative impact of carbon tax on output, and it will take more than 7 years to gradually eliminate the impact on the export of manufacturing products.

Among the 15 industrial product production sectors, the five industries with the highest proportion of output decline affected by carbon tariffs are: instrument office machinery, textile industry, clothing, leather and down products, electrical machinery and equipment, and communication and electronic equipment manufacturing industry; Among them, the output of the instrument and office machinery manufacturing industry, which suffered the most, decreased by 3.50% at a carbon tax rate of $30, and by 6.96% at a carbon tax rate of $60; The output of the textile industry dropped 1.60% at the carbon tariff rate of $30 and 3.18% at the carbon tariff rate of $60.

The seven industries with the highest export decline ratio (more than the average decline of the industrial sector) are respectively: petroleum processing industry, non-metallic mineral products, metal smelting processing, chemical industry, metal products, electrical machinery and equipment, and instrument and office machinery manufacturing. In particular, the electrical machinery equipment and instrument office machinery manufacturing industry, which is generally considered not to be a carbon intensive industry, saw an export decline of 3.97% and 3.85% respectively under the scenario of a carbon tariff rate of US $30; Under the scenario of a carbon tariff rate of $60, the export decline reached 7.79% and 7.66% respectively.

The calculation of the employment impact of the industrial sector shows that: under the carbon tariff rate of 30 dollars, the number of jobs decreased by 1.22% in the first year and 1.18% in the fifth year; Under the carbon tax rate of $60, the number of jobs decreased by 2.39% in the first year and 2.33% in the fifth year. The five industries with the highest proportion of job losses are: instrumentation office machinery, communication electronic equipment, electrical machinery equipment, textile industry, clothing, leather and down products; Under the carbon tax rate of $60, the number of jobs in the first year decreased by 12.14%, 6.14%, 5.41%, 5.48% and 5.10% respectively. ?
????
The reason why carbon tariffs will have a great impact on electrical machinery, instruments and meters and other industries that are not carbon intensive industries is that carbon tariffs are aimed at all carbon emissions in the whole production process, not only the production process of direct production of these products. For example, the carbon dioxide emitted by the production of intermediate input steel used for manufacturing automobiles is also the subject of carbon tariffs when exporting automobiles. In this way, due to the high emissions in the production process of intermediate products, although the final product does not appear to be a carbon intensive product, its total carbon emissions in the entire production process will be relatively high, so it will be impacted by carbon tariffs accordingly.

　　 Accelerate structural adjustment and improve resistance to external shocks

The carbon tariff dispute caused by global climate change may cause some subtle changes in international climate negotiations and international trade of manufacturing products. The Copenhagen Climate Change Conference failed to reach a legally binding agreement, which indicates that the international debate on climate change will be more intense in the future and more likely to lead to trade disputes. In view of the policy trend of the United States and other relevant countries trying to use carbon tariffs to bind climate change negotiations with international trade, China needs to accelerate economic restructuring and improve the tolerance of the economic system against external shocks in order to avoid greater potential shocks in the future. In the medium and long term, it is quite necessary to adjust foreign trade policies, change the export structure of industrial products, promote the reform of industrial structure, improve energy utilization efficiency, develop new energy, improve traditional energy utilization methods, reduce the energy intensity and carbon emission intensity of industrial sectors, and advocate and promote sustainable consumption patterns.

In addition, alternative countermeasures need to be considered. For example, we can try to study and set a Chinese style carbon tariff policy based on per capita form or cumulative per capita form carbon consumption under WTO rules, and consider launching countervailing policies on some products of the United States and other relevant countries when necessary; Or to solve the problem that the United States and the European Union file a lawsuit against the WTO on the grounds that China restricts the export of rare metals, try to use WTO rules to design more stringent strategic resource export restrictions under the goal of protecting the environment and non renewable resources.
?