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Carbon-based Border Tax Adjustments and China’s International Trade: Analysis based on a Dynamic Computable General Equilibrium Model

Ling Tang, Qin Bao, ZhongXiang Zhang () and Shouyang Wang
Additional contact information
Ling Tang: School of Economics and Management, Beijing University of Chemical Technology, China
Qin Bao: Institute of Systems Science, Academy of Mathematics and Systems Science, Chinese Academy of Sciences, China
Shouyang Wang: Institute of Systems Science, Academy of Mathematics and Systems Science, Chinese Academy of Sciences, China

No 2013.17, Working Papers from Fondazione Eni Enrico Mattei

Abstract: With large shares in global trade and carbon emissions, China’s international trade is supposed to be significantly affected by the proposed carbon-based border tax adjustments (BTAs). This paper examines the impacts of BTAs imposed by the USA and EU on China’s international trade, based on a multi-sector dynamic computable general equilibrium (CGE) model. The simulation results suggest that BTAs would have a negative impact on China’s international trade in terms of large losses in both exports and imports. As an additional border tariff, BTAs will directly affect China’s exports by cutting down exports price level, whereas Chinese exporting enterprises will accordingly modify their strategies, significantly shifting from exports to domestic markets and from regions with BTAs policies towards other regions without them. Moreover, BTAs will affect China’s total imports and sectoral import through influencing the whole economy in an indirect but more intricate way. Furthermore, the simulation results for coping policies indicate that enhancing China’s power in world price determination and improving energy technology efficiency will effectively help mitigate the damages caused by BTAs.

Keywords: Border Carbon Tax Adjustments; International Trade; Dynamic Computable General Equilibrium Model; Price Determination Power; Technological Change (search for similar items in EconPapers)
JEL-codes: D58 F18 Q43 Q48 Q52 Q54 Q56 Q58 (search for similar items in EconPapers)
Date: 2013-02
New Economics Papers: this item is included in nep-cmp, nep-ene, nep-env and nep-tra
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Related works:
Journal Article: Carbon-based border tax adjustments and China’s international trade: analysis based on a dynamic computable general equilibrium model (2015) Downloads
Working Paper: Carbon-based Border Tax Adjustments and China’s International Trade: Analysis based on a Dynamic Computable General Equilibrium Model (2013) Downloads
Working Paper: Carbon-based Border Tax Adjustments and China’s International Trade: Analysis based on a Dynamic Computable General Equilibrium Model (2013) Downloads
Working Paper: Carbon-based Border Tax Adjustments and China's International Trade: Analysis based on a Dynamic Computable General Equilibrium Model (2013) Downloads
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