Carbon Effects from Intra-Product International Specialization: Evidence from China’s Manufacturing Industries

Abstract

Intra-product international specialization promotes the global diversification of manufacturing industries with various carbon intensities. With the emerging topic of global warming, a new constraint on the use of carbon in international trade is being imposed on developing countries such as China. To explore the potential effects of this constraint on the progress of specialization, a new theoretical framework was proposed with a series of empirical tests derived from detailed panel data built on statistics from 2004 to 2020 from manufacturing industries in China. The test results indicate that carbon emissions and emission levels in manufacturing industries are partially induced by specialization. Industries with various attributes present heterogeneous performances under the carbon effect. Intra-product international specialization has more significant carbon effects on certain industries, such as those with a limited technique, capital-intensive industries, and industries that use a medium to a high level of carbon. Therefore, given the carbon constraints, high-quality development in manufacturing industries may be attained in developing countries such as China through improvements in specialization in the international market and incremental foreign investment in high-value-added and low-carbon production sectors. These improvements could be secured by implementing appropriate industrial policies and constraints on energy consumption.