The Global Environmental Impacts of China’s Accession to the WTO: A 20-Year Review

Abstract

Robust empirical assessments of the long-term cumulative global effects of free trade and economic globalization on the environment are limited. This account fills this gap by constructing a dynamic computable general equilibrium model to estimate the environmental effects of a milestone in the recent history of trade liberalization: China's 20-year World Trade Organization (WTO) accession. The modeling shows that China's accession could have resulted in an increase in the global cumulative greenhouse gases (GHGs), sulfur dioxide (SO 2 ), and nitrogen oxide (NO x ) emissions by roughly 14,000 Mt CO 2 -eq, 64 Mt, and 46 Mt, respectively. The global production scale effect contributed to most of these estimated increases. The regional total output composition effect also caused higher emissions. Meanwhile, the sectoral output composition effect helped reduce total emissions to a limited extent. Fortunately, a package of emission abatement measures led to a decrease in emission factors and a drop in the global cumulative emissions of GHGs, SO 2 , and NO x . The findings suggest that to enjoy the free trade and economic globalization benefits and minimize the induced emission increases, it is vitally important to systemically reduce emissions across the entire economy and nurture a low-carbon trade regime.