Impact of trade on China's SO2 emissions is relatively small

To better understand trades impact on the environment, we construct a four-equation simultaneous system in whichthree economic determinants define emissions: scale, composition and technique effects, all embodied directly by trade.Supposing the three economic determinants are also endogenous to trade, we check the indirect impacts of trade onthe environment in the following three functions through the intermediation of the three effects.We then estimate 29Chinese provinces’ panel data in the model on industrial SO;emissions （1993-2001）.Our estimation results revealthat export expansion and the accumulation of manufactured goods imports had the opposite roles on industrial SO2emissions determination.The results do not support the "pollution haven" hypothesis; the reinforced competitionexporters face is a positive factor that encourages technological progress in pollution abatement.China’s actualcomparative advantage resides in labor-intensive industries; exporting to the world market actually helps to reduce thepollution increases caused by China’s heavy-industry-oriented industrialization strategy, which government-intervenedimport activities traditionally support.