Global value chains participation and carbon emissions embodied in exports of China: Perspective of firm heterogeneity

This paper studies the impact of global value chains (GVCs) participation on carbon emissions embodied in exports (EEE) of China during 2005-2016, and analyses firm heterogeneity from the perspective of firm ownership and trade patterns; Then, industries are classified based on factor intensity and technology level, and the industrial heterogeneity of different firms is analyzed; Finally, through counterfactual analysis, this paper evaluates EEE under four anti-globalization scenarios. The empirical study shows that with the increase of GVCs position, EEE first increases and then decreases, showing an inverted U-shaped distribution. From the perspective of firm ownership, the relationship between GVCs position of domestic firms and EEE is inverted U-shaped distribution, while GVCs position of multinational enterprises (MNEs) is positively correlated with EEE. The relationship of capital-intensive and technology-intensive domestic firms, high-tech and medium-tech manufacturing domestic firms are also inverted U-shaped distribution. The positive correlation of MNEs is reflected in the low-tech manufacturing industries. From the perspective of trade patterns, with the increase of GVCs position, EEE of processing trade firms presents an inverted U-shaped distribution, while it is not significant for general trade firms. The inverted U-shaped relationship between GVCs position in capital-intensive industries and EEE are confirmed in all firms. Under anti-globalization scenarios of 50% backflow, EEE would increase. Under scenarios of 100% backflow, EEE would reduce. The results above provide useful references to achieve carbon emission reduction targets.