An Evaluation on Sectoral Competitiveness of Guangdong in China: The Role of Carbon Taxation Policy

Beibei Cheng, Peng Wang () and Songyan Ren
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Beibei Cheng: Guangzhou Institute of Energy Conversion, Chinese Academy of Sciences, Guangzhou 510640, China
Peng Wang: Guangzhou Institute of Energy Conversion, Chinese Academy of Sciences, Guangzhou 510640, China
Songyan Ren: Guangzhou Institute of Energy Conversion, Chinese Academy of Sciences, Guangzhou 510640, China

Energies, 2023, vol. 16, issue 4, 1-21

Abstract: Given the spatial heterogeneity of the social-economic situations across different regions in China, the decomposition of emission reduction targets should be designed according to the actual characteristics of the industrial economy. There is concern about the loss of industrial competitiveness and leakage of CO 2 emissions if just seven pilot carbon markets operate independently, so the national carbon market of the power sector was established in 2021. In this study, a China two-region CGE model including Guangdong (GD) and the rest of China (ROC) is built on an analysis of the long-term effects of CO 2 prices in industrial sectors at the target 2030 peak. Based on this model, we constructed one business-as-usual scenario and six comparison carbon tax scenarios to quantify the CO 2 cost impact for a wide range of manufacturing sectors and identify specific economic activities that face relatively high CO 2 costs between the two regions. Based on the China two-region CGE model, the risks of leakage and competitiveness distortions in these potentially exposed sectors are qualitatively assessed. The results show that chemical, nonferrous metal, and machinery are GD’s competitive sectors, and agriculture, food, textile, paper, cement, construction, and service belong to ROC’s competitive industry. Both GD and ROC need to further unify carbon pricing policies at the same time to effectively coordinate the carbon intensity reduction target and industrial development, which is 2.6% and 3.2% of the severe GDP loss compared with BaU when implementing carbon tax policy. The results can support the setting of the carbon tax and industrial competitiveness promotion policy and with a strong reference to support the provincial emission reduction path.

Keywords: CGE model; sectoral competitiveness; carbon tax; Guangdong (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2023
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