Pub Date : 2023-05-04DOI: 10.1080/17538963.2023.2246714
Xianling Long, L. Goulder
A carbon emission trading system (ETS) is a market-based policy instrument to combat climate change. It internalizes the societal cost of carbon dioxide (CO2) emissions and thereby creates incentives for emission reductions through changes in production methods and levels of production as well as investments in low-carbon technologies. ETSs are an important and much-employed alternative to emissions taxes (such as a carbon tax) as an instrument for bringing about reductions in CO2 emissions. Under an emissions tax, the government sets the price of a unit of emissions – this is the tax rate – and the quantity of emissions is determined by the market, that is, by firms’ and consumers’ responses to the tax. In contrast, under an ETS, the government influences emissions through its decisions affecting the number of emissions allowances to be allocated to firms; the price of emissions is determined by the market, not directly by the government. A key feature of an ETS is the provision for allowance trading. If the market price of emissions allowances is below a firm’s marginal cost of reducing its emissions, a competitive firm will have an incentive to purchase additional allowances and thereby avoid some of the cost of reducing its emissions. The reverse is the case for a firm for which the market price of allowances is above its marginal cost of abatement. In the presence of allowance trading, the firm’s ultimate (end-of-period) allocation of allowances, plus (minus) any allowances it purchases (sells) on the trading market, must be at least enough to justify its emissions during the period. The price of allowances is an equilibrium outcome of the allowance supply and demand. Allowance trading helps reduce the economy-wide costs of achieving emissions reductions by bringing about more abatement by the facilities that can do so at lower cost.
{"title":"Carbon emission trading systems: a review of systems across the globe and a close look at China’s national approach","authors":"Xianling Long, L. Goulder","doi":"10.1080/17538963.2023.2246714","DOIUrl":"https://doi.org/10.1080/17538963.2023.2246714","url":null,"abstract":"A carbon emission trading system (ETS) is a market-based policy instrument to combat climate change. It internalizes the societal cost of carbon dioxide (CO2) emissions and thereby creates incentives for emission reductions through changes in production methods and levels of production as well as investments in low-carbon technologies. ETSs are an important and much-employed alternative to emissions taxes (such as a carbon tax) as an instrument for bringing about reductions in CO2 emissions. Under an emissions tax, the government sets the price of a unit of emissions – this is the tax rate – and the quantity of emissions is determined by the market, that is, by firms’ and consumers’ responses to the tax. In contrast, under an ETS, the government influences emissions through its decisions affecting the number of emissions allowances to be allocated to firms; the price of emissions is determined by the market, not directly by the government. A key feature of an ETS is the provision for allowance trading. If the market price of emissions allowances is below a firm’s marginal cost of reducing its emissions, a competitive firm will have an incentive to purchase additional allowances and thereby avoid some of the cost of reducing its emissions. The reverse is the case for a firm for which the market price of allowances is above its marginal cost of abatement. In the presence of allowance trading, the firm’s ultimate (end-of-period) allocation of allowances, plus (minus) any allowances it purchases (sells) on the trading market, must be at least enough to justify its emissions during the period. The price of allowances is an equilibrium outcome of the allowance supply and demand. Allowance trading helps reduce the economy-wide costs of achieving emissions reductions by bringing about more abatement by the facilities that can do so at lower cost.","PeriodicalId":45279,"journal":{"name":"China Economic Journal","volume":null,"pages":null},"PeriodicalIF":3.3,"publicationDate":"2023-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41372542","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-05-04DOI: 10.1080/17538963.2023.2245515
F. Song, Ao Sun
ABSTRACT Building a new type of power system with wind and solar as the dominant body of sources is expected to play the key role for China to achieve carbon neutrality. Transiting from the fossil fuel dominating power system to a renewable dominating system requires both the technology progress and the institutional changes. The total direct investment cost of China’s power system decarbonization is estimated to be about 67.6 trillion yuan, which consists of new wind and solar power capacity, energy storage facilities, and transmission lines. The electricity storage technology is the key factor to affect the transitional costs. Meanwhile, institutional changes are needed to adapt to the high penetration of wind and solar to cope with the new challenges the renewable brings, namely the flexibility, adequacy and affordability. China’s market-oriented reform should move to the direction of establishing a real unified national market system to achieve the integration of high percentage of renewables.
{"title":"Carbon neutrality and renewable energy development in China","authors":"F. Song, Ao Sun","doi":"10.1080/17538963.2023.2245515","DOIUrl":"https://doi.org/10.1080/17538963.2023.2245515","url":null,"abstract":"ABSTRACT Building a new type of power system with wind and solar as the dominant body of sources is expected to play the key role for China to achieve carbon neutrality. Transiting from the fossil fuel dominating power system to a renewable dominating system requires both the technology progress and the institutional changes. The total direct investment cost of China’s power system decarbonization is estimated to be about 67.6 trillion yuan, which consists of new wind and solar power capacity, energy storage facilities, and transmission lines. The electricity storage technology is the key factor to affect the transitional costs. Meanwhile, institutional changes are needed to adapt to the high penetration of wind and solar to cope with the new challenges the renewable brings, namely the flexibility, adequacy and affordability. China’s market-oriented reform should move to the direction of establishing a real unified national market system to achieve the integration of high percentage of renewables.","PeriodicalId":45279,"journal":{"name":"China Economic Journal","volume":null,"pages":null},"PeriodicalIF":3.3,"publicationDate":"2023-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45249038","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-05-04DOI: 10.1080/17538963.2023.2244278
Min Wang
ABSTRACT By decomposing the changes of carbon emissions into effects of economic growth, industrial structural change, technological change and energy structure change, the paper firstly discusses the contribution of each effect to China’s carbon emission changes between 2020 and 2030, and forecasts China’s total carbon emissions in 2030. In particular, the paper strengthens that a decrease in population and a significant slowdown in urbanization will significantly reduce the construction demand, the main driver for high growth of carbon emissions in China, and provide a relatively favorable economic environment for China to achieve carbon peaking by 2030. The paper then discusses on how to achieve the ”dual carbon” goals with the lowest possible economic cost by relying on market and price mechanisms.
{"title":"Long-term forecast and policy discussion on China’s carbon emissions","authors":"Min Wang","doi":"10.1080/17538963.2023.2244278","DOIUrl":"https://doi.org/10.1080/17538963.2023.2244278","url":null,"abstract":"ABSTRACT By decomposing the changes of carbon emissions into effects of economic growth, industrial structural change, technological change and energy structure change, the paper firstly discusses the contribution of each effect to China’s carbon emission changes between 2020 and 2030, and forecasts China’s total carbon emissions in 2030. In particular, the paper strengthens that a decrease in population and a significant slowdown in urbanization will significantly reduce the construction demand, the main driver for high growth of carbon emissions in China, and provide a relatively favorable economic environment for China to achieve carbon peaking by 2030. The paper then discusses on how to achieve the ”dual carbon” goals with the lowest possible economic cost by relying on market and price mechanisms.","PeriodicalId":45279,"journal":{"name":"China Economic Journal","volume":null,"pages":null},"PeriodicalIF":3.3,"publicationDate":"2023-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44053081","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-05-04DOI: 10.1080/17538963.2023.2244277
Yuanyuan Yi, Jintao Xu
ABSTRACT Forest carbon sequestration has great potential for climate change mitigation. We show the cost-effectiveness of using forests as Nature-based Solutions pathways that offset carbon dioxide (CO2). Afforestation and reforestation expand forest cover, sustainable forest management increases forest productivity, and substituting carbon-intensive materials with wood products avoids the CO2 emitted in the production processes of these materials. In terms of these activities, we estimate that China’s total forest carbon sequestration potential will reach 2.4 billion tons of CO2 in 2050. Scenario analysis shows that the carbon sequestered by the forests in 2050 helps China meet its goal of carbon neutrality or net zero emissions.
{"title":"The potential of China’s ecosystems in meeting the carbon neutrality goal: evidence from the forest sector","authors":"Yuanyuan Yi, Jintao Xu","doi":"10.1080/17538963.2023.2244277","DOIUrl":"https://doi.org/10.1080/17538963.2023.2244277","url":null,"abstract":"ABSTRACT Forest carbon sequestration has great potential for climate change mitigation. We show the cost-effectiveness of using forests as Nature-based Solutions pathways that offset carbon dioxide (CO2). Afforestation and reforestation expand forest cover, sustainable forest management increases forest productivity, and substituting carbon-intensive materials with wood products avoids the CO2 emitted in the production processes of these materials. In terms of these activities, we estimate that China’s total forest carbon sequestration potential will reach 2.4 billion tons of CO2 in 2050. Scenario analysis shows that the carbon sequestered by the forests in 2050 helps China meet its goal of carbon neutrality or net zero emissions.","PeriodicalId":45279,"journal":{"name":"China Economic Journal","volume":null,"pages":null},"PeriodicalIF":3.3,"publicationDate":"2023-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49331848","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-05-04DOI: 10.1080/17538963.2023.2244281
Xing Chen, Xuan Wang, Tianyang Xi, Jintao Xu
ABSTRACT This paper presents an in-depth analysis of the Marginal Abatement Cost Curve (MACC) for CO2 of China’s industrial sector. Leveraging comprehensive firm-level panel data spanning the period 2011–2015, we employ a parameterized directional output distance function to estimate the shadow price of CO2. By doing so, we derive the marginal abatement cost for individual firms across different years, which provides crucial insights into two fundamental aspects: first, the variation in shadow prices as indicators of the economic efficiency of existing climate policies; and second, the carbon price levels necessary to achieve CO2 mitigation targets in the future. Furthermore, we conduct scenario simulations to assess the potential industrial output loss resulting from forthcoming carbon policies, such as the European Union’s Carbon Border Adjustment Mechanism (CBAM). Our findings underscore the necessity for a considerably higher tax rate to stimulate pollution reduction in order to meet the desired emission targets.
{"title":"Estimating the CO2 marginal abatement cost and implications for climate policies in China’s industrial sector: A firm-level analysis","authors":"Xing Chen, Xuan Wang, Tianyang Xi, Jintao Xu","doi":"10.1080/17538963.2023.2244281","DOIUrl":"https://doi.org/10.1080/17538963.2023.2244281","url":null,"abstract":"ABSTRACT This paper presents an in-depth analysis of the Marginal Abatement Cost Curve (MACC) for CO2 of China’s industrial sector. Leveraging comprehensive firm-level panel data spanning the period 2011–2015, we employ a parameterized directional output distance function to estimate the shadow price of CO2. By doing so, we derive the marginal abatement cost for individual firms across different years, which provides crucial insights into two fundamental aspects: first, the variation in shadow prices as indicators of the economic efficiency of existing climate policies; and second, the carbon price levels necessary to achieve CO2 mitigation targets in the future. Furthermore, we conduct scenario simulations to assess the potential industrial output loss resulting from forthcoming carbon policies, such as the European Union’s Carbon Border Adjustment Mechanism (CBAM). Our findings underscore the necessity for a considerably higher tax rate to stimulate pollution reduction in order to meet the desired emission targets.","PeriodicalId":45279,"journal":{"name":"China Economic Journal","volume":null,"pages":null},"PeriodicalIF":3.3,"publicationDate":"2023-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42438106","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-02DOI: 10.1080/17538963.2023.2163463
Bin Zhang, He Zhu, Jiajia Zhang
ABSTRACT The Chinese economy marked a turning point around 2010 to 2012, with economic growth, expenditure structure, industrial structure, and other macroeconomic indicators running counter to their earlier trends. There was a common cause behind all the changes: economic transformation from manufacturing to services. Starting with saturation in demand for manufactured goods, household consumption began to shift toward more human capital – intensive services, which led to a chain of effects in the industrial structure, slower economic growth, altered labor flows, as well as changes in the features of the business cycle. Compared with other high-income economies when they were at a similar development stage, China’s economic transformation from manufacturing to services has been the standard practice.
{"title":"A portrait of China’s economic transformation: from manufacturing to services","authors":"Bin Zhang, He Zhu, Jiajia Zhang","doi":"10.1080/17538963.2023.2163463","DOIUrl":"https://doi.org/10.1080/17538963.2023.2163463","url":null,"abstract":"ABSTRACT The Chinese economy marked a turning point around 2010 to 2012, with economic growth, expenditure structure, industrial structure, and other macroeconomic indicators running counter to their earlier trends. There was a common cause behind all the changes: economic transformation from manufacturing to services. Starting with saturation in demand for manufactured goods, household consumption began to shift toward more human capital – intensive services, which led to a chain of effects in the industrial structure, slower economic growth, altered labor flows, as well as changes in the features of the business cycle. Compared with other high-income economies when they were at a similar development stage, China’s economic transformation from manufacturing to services has been the standard practice.","PeriodicalId":45279,"journal":{"name":"China Economic Journal","volume":null,"pages":null},"PeriodicalIF":3.3,"publicationDate":"2023-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45067068","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-02DOI: 10.1080/17538963.2023.2164950
Shiyun Li
ABSTRACT China’s ambition to realize common prosperity for all the people has received worldwide attention since its complete victory over extreme poverty in 2020. This paper summarizes for the first time the “who, what, when and how” that essentially characterizes common prosperity, i.e. common prosperity is prosperity for all the people, is prosperity in all aspects, means step-wise prosperity and calls for joint contribution, and clarifies that it is not equivalent to “becoming rich at the same time” or “being equally well off”, nor is it the same thing as egalitarianism. Contemporary China faces challenges including the development challenge, the distribution problem and the public products supply issue in achieving this long-term goal. Possible solutions may be fostering high-quality development, optimizing income distribution, strengthening the social safety net, achieving effective digital governance and promoting high-level opening-up.
{"title":"Understanding China’s road to common prosperity: background, definition and path","authors":"Shiyun Li","doi":"10.1080/17538963.2023.2164950","DOIUrl":"https://doi.org/10.1080/17538963.2023.2164950","url":null,"abstract":"ABSTRACT China’s ambition to realize common prosperity for all the people has received worldwide attention since its complete victory over extreme poverty in 2020. This paper summarizes for the first time the “who, what, when and how” that essentially characterizes common prosperity, i.e. common prosperity is prosperity for all the people, is prosperity in all aspects, means step-wise prosperity and calls for joint contribution, and clarifies that it is not equivalent to “becoming rich at the same time” or “being equally well off”, nor is it the same thing as egalitarianism. Contemporary China faces challenges including the development challenge, the distribution problem and the public products supply issue in achieving this long-term goal. Possible solutions may be fostering high-quality development, optimizing income distribution, strengthening the social safety net, achieving effective digital governance and promoting high-level opening-up.","PeriodicalId":45279,"journal":{"name":"China Economic Journal","volume":null,"pages":null},"PeriodicalIF":3.3,"publicationDate":"2023-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44521590","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-11-15DOI: 10.1080/17538963.2022.2145629
{"title":"Statement of Retraction: Why did they get in trouble? The influence of firm characteristics and institutional distance in the case of Chinese outward foreign direct investment","authors":"","doi":"10.1080/17538963.2022.2145629","DOIUrl":"https://doi.org/10.1080/17538963.2022.2145629","url":null,"abstract":"","PeriodicalId":45279,"journal":{"name":"China Economic Journal","volume":null,"pages":null},"PeriodicalIF":3.3,"publicationDate":"2022-11-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46565067","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-09-02DOI: 10.1080/17538963.2022.2117193
Yanliang Miao, Xu Fei
ABSTRACT Since the collapse of the Bretton Woods system in 1973, evolution has been the defining feature of changes in the IMS. The IMS has always been dominated by the US dollar. With it comes four structural issues: imbalance, lack of coordination, inade quacy, and weaponization of financial infrastructure. The Russia–Ukraine conflict will further accelerate the diversification and fragmentation of the IMS. But it might also lead to revolutionary changes such as balkanization of the IMS and even the end of financial globalization. Diversification of reserve currency could alleviate the imbalance and inadequacy problems of the IMS, restraining the dollar weaponization to some extent, but could not solve the problem of incoordination. Without a fair and inclusive IMS, ever larger financial spillovers will come from center countries to peripheral ones, and the global economy and financial system will face greater challenges in both efficiency and stability.
{"title":"The international monetary system: evolution and revolution","authors":"Yanliang Miao, Xu Fei","doi":"10.1080/17538963.2022.2117193","DOIUrl":"https://doi.org/10.1080/17538963.2022.2117193","url":null,"abstract":"ABSTRACT Since the collapse of the Bretton Woods system in 1973, evolution has been the defining feature of changes in the IMS. The IMS has always been dominated by the US dollar. With it comes four structural issues: imbalance, lack of coordination, inade quacy, and weaponization of financial infrastructure. The Russia–Ukraine conflict will further accelerate the diversification and fragmentation of the IMS. But it might also lead to revolutionary changes such as balkanization of the IMS and even the end of financial globalization. Diversification of reserve currency could alleviate the imbalance and inadequacy problems of the IMS, restraining the dollar weaponization to some extent, but could not solve the problem of incoordination. Without a fair and inclusive IMS, ever larger financial spillovers will come from center countries to peripheral ones, and the global economy and financial system will face greater challenges in both efficiency and stability.","PeriodicalId":45279,"journal":{"name":"China Economic Journal","volume":null,"pages":null},"PeriodicalIF":3.3,"publicationDate":"2022-09-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42591618","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-09-02DOI: 10.1080/17538963.2022.2117198
Yuqing Xing
ABSTRACT Global value chains have been a major means of manufacturing and trading goods internationally. Economic efficiency was the sole factor driving the proliferation of GVCs and the China-centered GVCs were established in a variety of manufactured products. In recent years, the China–US trade war and the unfolding COVID-19 pandemic have sent shock waves and disrupted smooth operations of GVCs, which has triggered the geographic restructuring of GVCs, in particular value chain diversification away from China. This paper analyzes the centrality of China in value chains and the vulnerabilities of GVCs exposed to the trade war and the pandemic. This paper provides comprehensive empirical evidence on GVC restructuring from different perspectives and discusses policy options that China could cope with the tide of the value chain diversification.
{"title":"China and global value chain restructuring","authors":"Yuqing Xing","doi":"10.1080/17538963.2022.2117198","DOIUrl":"https://doi.org/10.1080/17538963.2022.2117198","url":null,"abstract":"ABSTRACT Global value chains have been a major means of manufacturing and trading goods internationally. Economic efficiency was the sole factor driving the proliferation of GVCs and the China-centered GVCs were established in a variety of manufactured products. In recent years, the China–US trade war and the unfolding COVID-19 pandemic have sent shock waves and disrupted smooth operations of GVCs, which has triggered the geographic restructuring of GVCs, in particular value chain diversification away from China. This paper analyzes the centrality of China in value chains and the vulnerabilities of GVCs exposed to the trade war and the pandemic. This paper provides comprehensive empirical evidence on GVC restructuring from different perspectives and discusses policy options that China could cope with the tide of the value chain diversification.","PeriodicalId":45279,"journal":{"name":"China Economic Journal","volume":null,"pages":null},"PeriodicalIF":3.3,"publicationDate":"2022-09-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48785540","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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