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Is Chinese trade policy motivated by environmental concerns?

Is Chinese trade policy motivated by environmental concerns?

Dr Sabrina Eisenbarth

Dr Sabrina Eisenbarth completed her PhD at The University of Nottingham School of Economics, supervised by Bouwe Dijkstra and Richard Kneller. Sabrina's research interests include environmental and resource economics as well as international trade using both theoretical and empirical methods. She has been working on Chinese trade and environmental policy and on renewable resources.

This Journal of Environmental Economics and Management paper analyses whether China's export VAT rebates and export taxes are driven by environmental concerns. Since China struggles to enforce environmental regulation, trade policy can be used as a second-best environmental policy. In a general equilibrium model it is possible to show that the second-best export tax increases in a product's pollution intensity. The empirical analysis investigates whether the export tax equivalent of partial VAT rebates and export taxes are higher for products which are more pollution intensive along several dimensions. The results indicate that the VAT rebate rates are set in a way that discourages exports of water pollution intensive, SO2 intensive and energy intensive products from 2007 on. Moreover, the conservation of natural resources such as minerals, metals, wood products and precious stones seems to be a key determinant of China's export VAT rebate rates. There is little evidence that export taxes are motivated by environmental concerns.

Journal of Environmental Economics and Management, (March 2017), 'Is Chinese trade policy motivated by environmental concerns?' , by Sabrina Eisenbarth.

 

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Posted on Monday 3rd April 2017

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