Dynamic Impact of Carbon Emission Trading on China's Macro Economy - Based on CGE Model

As the economy develops at a speed in China, the emissions of carbon dioxide also increase on a growing basis, which result in the continuous rise of the seal level and frequent occurring of extreme climates, and become of one the major obstacles impeding the economic development in China. One of the most effective way to reduce the emissions of carbon dioxide is to establish carbon emission trading market and adopt marketization to reduce carbon emissions. In the paper, CGE model of carbon emission trading is built and six-year social accounting matrix (SAM) is compiled. Besides, four emission reduction ratios in different strengths are set up, to conduct model analysis on the influence of carbon emission trading system on China's GDP and four main bodies of macro economy operation, which are enterprises, residents, governments and foreign people. Based on the model analysis, it has been found that carbon emission trading system has negative impact on China's GDP, import and export and enterprise investment, and the negative impact present the U-shaped trend. In addition, the carbon emission trading system also plays the negative role on the consumers' consumption and governments' taxation. However, the negative impact decreases year by year, suggesting that although the carbon emission trading system has negative impact on China's macro economy, the negative impact is shrinking in the recent decade. In the current stage, the national carbon emission trading market shall be established gradually, the carbon emission trading system shall be perfected, and the emission amount of carbon dioxide shall be reduced, to build a beautiful homeland of China.