Role of global value chains in embodied domestic CO2 emissions of China's manufacturing exports: Normal and processing trade heterogeneity

The extant literature has not sufficiently investigated the heterogeneity of embodied CO2 emissions in exports (EEE) from normal trade and processing trade. Deep extension of global value chains (GVC) profoundly affects the patterns of implied emissions worldwide, and the role of GVC in China's emissions from manufacturing exports is a critical topic under the context of GVC embeddedness. This paper discusses the evolutionary trends, export structures, drivers, and industrial paths of EEE in China's manufacturing sectors under processing and normal exports during 1995-2018, focusing on uncovering the role of GVC. Several major findings emerge. (1) The export modes of China's manufacturing EEE are transforming, with the dominance of normal exports appearing gradually. Processing exports focus on final product trade in high-technology manufacturers, while normal exports concentrate on GVC-related trade in medium-technology manufacturers, giving remarkable heterogeneity in sectoral structure and export routes across various export modes. (2) Complex GVC is growing rapidly and is increasingly significant in manufacturing EEE. Simple GVC is stretching toward complex GVC, where EEE involves more intermediates production processes with a wide range of trading countries. Trading diversification arising from the in-depth expansion of GVC has further alleviated China's previous highly concentrated trade conditions, which is significant for the stability of China's domestic production and external trade. (3) Sectors exhibit notable distinctions regarding the status of industrial paths and the drivers of emissions changes, suggesting that mitigation policies should be differentiated and targeted to specific sectors. These findings suggest far-reaching implications for China to adjust resource allocation globally and solve the increasingly complicated emission issues. The results can also help China to formulate external trade policies, restructure trade modes, and drive export upgrading in embedding GVC, thereby facilitating energy efficiency and a cleaner environment.