Trade and environment in China: an input-output perspective on the pollution haven hypothesis

Chinese input-output tables and data on Chinese energy consumption for 1995 and 2005 have been used to investigate the link between China's spectacular trade performance and its environmental impact. The results suggest that although China's ever increasing trade surplus is contributing to environmental degradation through the increased scale of energy demands, this deterioration has, to some extent, been offset by both trade induced changes in technology and by changes in the composition of trade. The results provide little support for the pollution haven hypothesis and indicate that this is an inappropriate argument to be used against the introduction of pollution abatement measures in developed economies.