Abstract: The mainland made a commitment of "carbon peaking and carbon neutrality" in 2020, and the decarbonization measures have been accelerated, and the research in this paper believes that the promotion of carbon neutrality strategy is conducive to promoting the upgrading of foreign trade structure, reducing the impact of trade barriers, reducing energy import dependence, and bringing opportunities for the transformation and upgrading of mainland foreign trade. At the same time, it is necessary to pay attention to the challenges brought by "carbon neutrality" to trade, the export of low-end and high-carbon industrial products will be restricted to a certain extent, fossil energy imports will decline significantly, the export structure of the steel industry will be differentiated, and the rising cost of the shipping industry will weaken the original advantages. In addition, the implementation of new systems such as "carbon tariffs" and "carbon labels" may give rise to new trade barriers, which will raise the cost of foreign trade enterprises, weaken the export competitiveness of mainland steel and metal products, affect the introduction of foreign advanced technologies, and exert certain pressure on economic growth in the short term. Finally, this paper makes targeted suggestions to strengthen international regional cooperation, improve low-carbon emission reduction mechanisms, promote the upgrading of export industries and promote the transformation of foreign trade enterprises, strengthen low-carbon research and development innovation, enhance the application of emission reduction technologies, improve financial security tools, improve risk resilience, actively respond to the challenges brought by carbon neutrality, and help high-quality economic development.
The mainland's "carbon peak, carbon neutral" strategic goal was officially announced at the United Nations General Assembly in September 2020. The implementation of the continental carbon neutrality strategy will have a profound impact on global economic development and will play an important role in improving the global climate and environment. Carbon neutrality is closely related to the structure of energy use, bulk raw materials, and the structure of middle and lower reaches of commodities, and has a linkage effect on the mainland foreign trade industry through input and output. Under the background of global carbon neutrality, what opportunities and challenges will the mainland's foreign trade face, how the industrial structure of the mainland's commodity trade and service trade will change, and how the mainland's foreign trade should actively respond to and transform and upgrade are all worthy of in-depth study.
First, carbon neutrality brings opportunities for the transformation and upgrading of mainland foreign trade
According to the climate economics environment Kuznets ("ECK" curve) theory, the economic development level and carbon dioxide emissions of a country or region show an inverted "U" relationship, which is consistent with the policy connotation of "carbon peaking and carbon neutrality" (Figure 1). An economy in the early stage of industrialization, the economic level (per capita GDP) and environmental pollution level (carbon emissions) are relatively low, with the deepening of economic growth and industrialization, the rapid growth of carbon emissions reached the peak is "carbon peak", and then with the optimization of industrial structure, economic level, environmental attention and other factors, carbon emissions and per capita GDP growth began to "decouple", carbon emissions gradually fell to the critical value of the state that is, "carbon neutrality". The specific contents of the "double carbon" commitment made by the mainland in 2020 include: it will strive to reach the peak of carbon dioxide emissions by 2030 and strive to achieve carbon neutrality by 2060. "Carbon peaking" means that carbon dioxide emissions no longer increase and gradually decrease after peaking; "carbon neutrality" means that anthropogenic emissions of carbon dioxide are absorbed and neutralized by external efforts (carbon storage and carbon sequestration) and natural processes (carbon sequestration in forestry, oceans and soils). This "3060 goal" was included in the mainland's "14th Five-Year Plan", and the Central Economic Work Conference also listed the work of "carbon peaking and carbon neutrality" as one of the key tasks.
Figure 1: Environmental Kuznets curve Source: Grossman and Krueger (1991), Plant Trust Investment Institute.
The key to the "carbon peak, carbon neutral" policy is how to achieve carbon neutrality. There is no ceiling limit on the level of carbon peaking and height to be reached. Carbon neutrality needs to be achieved through two paths: "reducing emissions" and "neutralizing emissions". On the one hand, through the replacement of fossil energy and technological breakthroughs, reduce and reduce the total carbon emissions of existing industrial industries; on the other hand, for carbon dioxide that cannot be replaced by energy and have to be emitted, carbon sequestration and carbon absorption methods are used to achieve carbon neutrality. Carbon neutrality has brought important opportunities for the transformation and upgrading of mainland foreign trade.
(1) Carbon neutrality is conducive to promoting the upgrading of foreign trade structure
The low-carbon transformation of the foreign trade industry can bring new trade growth points and employment opportunities, which is the key support for realizing the mainland's future export quantity and quality improvement and optimization and efficiency. According to the "Research on China's Long-term Low-Carbon Development Strategy and Transformation Path", the energy system needs to invest about 100 trillion yuan from 2020 to 2050, and its annual new investment accounts for about 3.1% of the mainland's annual GDP. Large-scale green investment will drive export growth and drive employment, and it is expected to create about 2 million new jobs. Carbon neutrality will force the innovation of the mainland industrial system, especially the manufacturing industry, and promote the mainland's high-carbon industry to improve technology and productivity, and achieve energy conservation and emission reduction and optimization and upgrading. At the same time, carbon neutrality will also accelerate the export competitiveness of the tertiary industry, bypass various trade barriers, and shift from "manufacturing and processing trade" to "knowledge service trade". In the first three quarters of 2021, the import and export of knowledge-intensive services in the mainland increased by 13.3%, accounting for 44.7% of the total import and export of services. Among them, intellectual property royalties, telecommunications computers and information services grew the fastest, with growth rates of 26.1% and 21.5%. The competitive advantage of the mainland's knowledge-based service trade has gradually increased, and there is still a large space for future export growth, and carbon neutrality will promote the transformation and structural upgrading of the mainland's export trade.
(2) Carbon neutrality is conducive to reducing the impact of trade barriers
Carbon neutrality policies in the European Union and other regions started earlier, and in order to protect local enterprises and prevent carbon leakage and carbon transfer, the "Carbon Border Regulation Mechanism (CBAM)" and other means were put on the agenda. Once such "green trade barriers" are implemented, it will greatly affect the stability of mainland exports and reduce the international competitiveness of exports. Walmart has required a carbon footprint for products on the shelves since 2014, affecting more than 500 Walmart upstream and downstream companies, of which 80% of the supply chain companies are in China. According to the statistics of the Ministry of Commerce, in the past decade, about 70% of the mainland's export enterprises have encountered different degrees of trade barrier restrictions, 25% of the export volume has been affected, and the loss is about 200 billion US dollars, of which the loss caused by green trade barriers from the European Union, the United States and Japan accounts for about 90%. It can be seen that the implementation of carbon neutrality in the mainland will further enhance the content of green technologies, integrate more deeply into the global supply chain, and enhance its own value chain position, thereby reducing the impact of trade barriers and reducing the loss of future export trade.
(C) carbon neutrality is conducive to reducing energy import dependence
At present, the mainland is more dependent on the import of fossil fuels such as oil and natural gas. The mainland became the largest oil importer in 2018, with 542 million tons of oil imports in 2020, and the dependence on oil to foreign countries was as high as 72%. In 2020, the mainland's natural gas production will be 192.5 billion cubic meters, but the consumption will reach 324 billion cubic meters, the import volume will be about 131.5 billion cubic meters, and the dependence of the mainland's natural gas on foreign countries will be about 40.6%. The main way to achieve carbon neutrality is to replace the use of fossil energy and increase the proportion of non-carbon energy, thus helping the mainland to gain the initiative in the race of energy transition, reducing dependence on overseas high-emission energy sources, and maintaining the independence of national energy use.
Second, commodity trade is facing structural challenges and transformations
Energy innovation could drive a new "Jugra" cycle that could change global trade patterns and commodity structures. In the process of achieving "carbon peaking and carbon neutrality" on the mainland, commodity trade will face structural challenges and transformations.
(1) The growth rate of exports of low-carbon and new energy products is expected to accelerate
According to the International Energy Agency (IEA), 90% of the world's power generation in 2050 will come from renewable sources, of which photovoltaic and wind energy will account for up to 70%, and new energy sources such as photovoltaics will become the mainstream in the future. At present, the mainland has accumulated market advantages in this field, is the world's largest hydrogen energy producer, responsible for more than 50% of the world's electric vehicles and power battery production, while wind power and solar energy installed capacity of renewable energy is the world's first. In recent years, the mainland's exports of low-carbon and new energy products have shown a rapid growth trend. In June 2021, exports of wind turbines, solar cells and accumulators were US$290 million, US$2.28 billion and US$2.27 billion, respectively, an increase of 372.6%, 115.0% and 84.9% over the same period in 2018. In the future, the scale effect of the mainland's low-carbon and new energy industries will be fully utilized, and the export competitive advantage of low-carbon products will be further enhanced.
(2) The export of low-end and high-carbon industrial products will be restricted to a certain extent
In recent years, the mainland has strictly controlled the new production capacity of high-carbon emission industries such as thermal power generation and electrolytic aluminum, and adopted production restriction measures for industries with high pollution intensity and low production efficiency to reduce excess capacity. First of all, the upstream high-carbon production link or the low-end industry passively reduce exports. For industries such as light industry textiles, petrochemical procurement, heavy metal smelting and rolling processing, the situation of export expansion that previously relied on low environmental costs will be reversed. Under the pressure of emission reduction restrictions and environmental improvement, high-carbon enterprises will significantly increase costs due to the purchase of carbon emission quotas, improve decarbonization equipment, and then impact the competitiveness of product exports, and "passively" reduce exports due to cost constraints. Second, industries related to the infrastructure industry have taken the initiative to reduce exports. Industries such as aluminum and steel, which are related to domestic infrastructure and industrial capacity, are vulnerable to international commodity fluctuations. In order to maintain the stability of domestic production, in the short term, such high-carbon commodities will be dominated by domestic supply, and exports will be "actively" reduced by ensuring domestic supply.
(3) Imports of low-carbon technology equipment and new energy raw materials have been boosted
In order to make up for the shortcomings of low-carbon production technology, the mainland will increase the import of low-carbon technology equipment. At present, some core green energy technologies are concentrated in a few developed industrial countries, such as Japan, which dominates fuel cell research, and Europe, which is in the lead in storing low-carbon hydrogen energy. Increasing the import of low-carbon technology and equipment will help control carbon emissions from the upstream of the manufacturing production chain and achieve carbon emission reduction in an all-round and effective manner. The development of photovoltaic and wind power industries will boost imports of copper, aluminum and nickel. Photovoltaic, wind power and new energy batteries are the main sources of demand for copper, it is expected that the total amount of copper used in 2030 will reach 6.5 million tons, and the compound growth rate of copper demand in the next 10 years will reach 4.3%, the highest demand growth level in history. At present, the domestic electrolytic aluminum production capacity has reached the ceiling, the future growth space is limited, the production cycle of electrolytic aluminum supply is very long, and the import demand for aluminum in mainland new energy production will remain resilient.
(4) Import dependence on fossil fuels will decline significantly
The mainland became the world's largest energy importer in 2018, importing about 970 million tons of standard coal that year, and the carbon emissions from fossil energy combustion accounted for about 75% of the total carbon emissions, and reducing fossil energy is the most effective way to reduce carbon emissions. According to the 14th Five-Year Plan for industrial planning, the mainland's annual coal imports may not exceed 100 million tons, compared with 304 million tons imported in 2020, the future coal imports will be significantly reduced. Driven by global carbon neutrality, the mainland has accelerated the development of clean energy to replace fossil energy imports, and fossil energy sources such as iron ore, coke, thermal coal, and crude oil, which were highly dependent on imports in the past, will continue to decline in the future.
(5) The export structure of the steel industry is differentiated
The steel industry has a greater impact on the mainland's carbon emissions and is the manufacturing sector with the highest carbon emissions in the mainland. Mainland steel emissions account for 51% of global steel industry carbon emissions, far exceeding the share of steel carbon emissions in other economies (Figure 2). During the same period, the EU steel industry accounted for 12% of global steel carbon emissions, and Japan accounted for 8%. From the perspective of the composition of the mainland carbon emission industry, steel ranks third with a proportion of 10%, ranking behind the thermal power and oil industries, and the carbon emission reduction of the steel industry will play an important role in the overall carbon reduction and environmental improvement of the mainland industry. The emissions of particulate matter, sulfur dioxide and nitrogen oxides in the continental steel industry were about 9.258 million tons, ranking first in all industrial industries. On the one hand, under the constraint of carbon neutrality targets, the export of low- and medium-end steel products has decreased significantly. Low-end steel in the production process will produce a large number of fossil energy consumption and pollution emissions, iron ore as the main raw material for steel production, has become a foreign mining giant to the mainland steel companies to bargain "killer". In the gap between high import prices and low export prices, the profits of low-end steel exports on the mainland are squeezed, and various pollutant emissions are left in the country during the production process. Therefore, controlling the export of low-end steel has become an effective way to achieve carbon neutrality, and the mainland raised the export tariffs of some low-end steel twice in May and August 2021 to achieve the purpose of restricting new production capacity and ensuring domestic supply. On the other hand, the export of high-end steel products is expected to continue. At the same time, in order to encourage high-end steel to participate in international competition, customs still retains export tax rebates for high-value-added and high-tech steel products such as electrical steel and automobiles. The purpose is to promote the formation of low-carbon production chains and supply chains in the steel industry, increase mainland high-end steel exports and enhance international competitiveness.
Figure 2: Carbon emissions share of the steel industry in the world's major economies Unit: % Data source: BP, Flush, OECD, public information collation.
Third, the challenges and opportunities for trade in services coexist
In the context of decarbonization, the cost of the transportation service industry may rise, and the shipping industry is under pressure. The maritime service industry occupies an important position in the mainland's trade in services. From January to September 2021, the mainland's exports of transport services accounted for 35.8% of total exports of trade in services. In September, the export of mainland transport services increased by 154.7%, which is the main force driving the export of service trade. Currently, more than 96% of the world's dry cargo containers and 100% of the refrigerated containers are produced by the mainland. The continental shipping fleet ranks second in the world in size. Among the top 10 ports in the world for cargo throughput, China accounts for 8 seats, and among the top 10 ports in terms of container throughput, China accounts for 7 seats. It can be seen that whether the high-level development of the international maritime service industry directly affects the quality and scale of mainland service trade. Decarbonizing the maritime services sector will increase cost pressures.
There seems to be an "impossible triangle" in the process of achieving carbon neutrality in the maritime service industry, that is, it is difficult to balance environmental protection, energy security and economic benefits at the same time. In the case of using safe energy and ensuring the ecological environment, the rising cost of shipping has become inevitable, and the high cost may restrict the development of the industry. About 90% of the world's total import and export freight is shipped by sea, and maritime carbon emissions account for 2.5% of global emissions. The International Maritime Organization's (IMO) carbon reduction target is to reduce greenhouse gas emissions by 50% by 2050 compared to 2008, and "decarbonization" is the future direction of maritime services. Since the outbreak of the epidemic, global maritime prices have soared, with the Baltic Sea Index (BDI) index and container prices reaching new highs. It is predicted that the capacity of containers, ships and ports will be tight for at least the next three years, and the shortage of global maritime capacity will continue. Although since September this year, some global shipping giants have adopted a frozen price strategy to stabilize prices, the undefused contradiction between supply and demand in shipping and the shortage of ship containers have further exacerbated the pressure on maritime transport, and the implementation of carbon neutrality targets may weaken the international competitiveness of the mainland's transport service industry.
In the future, low-carbon carbon storage technology will drive the acceleration of the trend of servitization of manufacturing industry. Carbon neutrality is driven by technology. At present, there are still technical shortcomings in carbon capture, carbon storage, carbon decarbonization, carbon sequestration, carbon condensation and other aspects of the mainland, and the introduction of low-carbon technology is conducive to the optimization of industrial production in the mainland and promotes the transformation of decarbonized production. The trend of servitization of manufacturing industry is becoming more and more obvious, the traditional boundary between manufacturing and service industry is gradually broken, service trade, especially digitalization and low-carbon technology, has become more and more significant in supporting manufacturing trade, and the service, high-end, digitization and low-carbon of manufacturing trade have become the future development trend. The integration of technical services into manufacturing trade can help accelerate the pace of carbon neutrality. For example, China's steel uses the converter steelmaking method, which emits 2 tons of carbon dioxide equivalent per ton of steel, Canada adopts the electric arc furnace steelmaking method, which emits 1.5 tons of carbon dioxide equivalent per ton of steel, and the United States adopts the optimized small electric arc furnace steelmaking method, which emits 1 ton of carbon dioxide equivalent per ton of steel. It can be seen that the key to the "decarbonization" of manufacturing trade depends on the integration with technical services.
Fourth, "carbon tariffs" and "carbon labels" are the two major challenges of mainland foreign trade
In the process of achieving the goal of carbon neutrality, some developed economies use technical restrictive means to form trade barriers, which may hinder the mainland's participation in the international division of labor and trade exports. With the Opening of the Carbon Neutrality Process by the European Union and Japan, the "Carbon Tariff" and "Carbon Labeling" systems have become two potential challenges facing mainland foreign trade under the "double carbon" policy.
(1) The implementation of "carbon tariffs" may weaken the competitiveness of mainland export commodities
Carbon tariffs are the imposition of additional tariffs on imports and exports of goods that imply carbon dioxide emissions. In December 2019, the European Union released the European Green New Deal to implement carbon tariffs within the European Union, the main purpose of which is to reduce carbon leakage and carbon transfer on a global scale and prevent "bottom-by-bottom competition" that is detrimental to the environment. Specifically, it will not only prevent the transfer of high-carbon emission enterprises in the EU to regions with relaxed emission reduction policies, but also prevent imports with high emissions and low prices from impacting EU markets and industries. In July 2021, the EUROPEAN Union proposed a package of environmental protection proposals, with clear provisions for the implementation of the carbon tariff system. According to the proposal, the EU plans to implement carbon tariffs from 2023, and formally impose carbon tariffs on some goods imported from the EU from 2026, when the EU will impose additional carbon tariffs on goods such as steel, cement, aluminum and fertilizers imported from countries and regions with loose carbon emissions. In the future, the landing of carbon tariffs will bring challenges and impacts to the mainland's export competitiveness, import costs, and economic growth.
First, "carbon tariffs" may reduce the share of exports such as steel and metal products. Once the carbon tariff is implemented, the price of the subject goods subject to taxation will become "more expensive" and weaken the international competitiveness of the mainland's export goods. Using the 2020 mainland export data for basic analysis, under the heavy pressure of the EU carbon tariff, the scale of the mainland's affected exports is about 1.1 trillion US dollars, accounting for 42.1% of the total trade volume. If carbon tariffs were levied only on high-carbon industries, the size of exports affected would be about $455 billion, or 17.6 percent of total trade. Based on the DATA OF THE EU WIOD input-output data from 2000 to 2014, it is found that the implementation of the EU carbon tariff will reduce the share of mainland exports by 0.3%, and the three industries with the greatest impact on mainland exports are machinery and equipment, metal products and non-metallic mineral products.
Second, high emission intensity is the main reason why the mainland will bear higher carbon tariffs in the future. According to the calculation formula of carbon tariff, the level of carbon tariff is determined by three factors: the import tax rate of carbon tariff, the quantity of imported goods (measured in tons), and the carbon emission intensity of imported products. Among them, the carbon tariff import tax rate and the quantity of imported goods are determined by the objective situation of imports and exports, and the carbon emission intensity of imports is determined by the production technology of the exporting country. The average carbon intensity of mainland exports to the EU in 2020 is 0.89 kg/USD, while the average emission intensity of EU exports to the mainland is only 0.28 kg/USD. From this comparison, it can be seen that improving production technology and reducing carbon emission intensity are important means to reduce the cost burden of carbon tariffs on the mainland in the future.
Third, the "carbon tariff" may increase the cost of introducing advanced technologies on the mainland. After the implementation of carbon tariffs, in order to connect domestic production enterprises with the international market, export producers need to introduce advanced low-carbon technologies and production processes from developed countries, resulting in high production and operating costs of foreign trade enterprises, which may compress the operating income and profit margins of foreign trade enterprises. For example, in the Sino-US trade war, the United States has raised carbon emission intensity requirements and implemented relevant carbon emission standards, so that some mechanical, electrical, electronic and other products in the mainland have withdrawn from the market because they have not met US standards. If these mechanical and electrical goods are to be successfully exported to the United States, they must introduce relevant emission reduction technologies and equipment from developed countries, which will increase costs.
Fourth, the "carbon tariff" may exert some pressure on economic growth in the short term, but the impact is limited. By using the global multi-regional static general equilibrium model, the impact of carbon tariffs on the mainland's GDP is calculated and simulated, and the impact coefficient of the EU carbon tariff on the overall GDP of the mainland is -0.01%, which is the same as the ASEAN GDP impact coefficient of -0.01%, and much lower than the impact coefficient of -0.05% on Russia. The increase in EU carbon tariffs is limited, and the impact on the exporters of high-carbon raw materials represented by Russia is more significant, while mainland exports to the EU are mainly labor-intensive and mechanical and electrical terminal products. The EU carbon tariffs are imposed on all regions of the world, unlike the targeted tariffs imposed by the United States during the Sino-US trade friction.
(2) The implementation of "carbon labeling" may raise the cost of export trade
A carbon label is an environmental label that identifies the greenhouse gases (carbon footprint) emitted by a traded commodity during its life cycle with a quantitative index, informing consumers of the carbon footprint of the traded goods in the form of a label. The EU's carbon tariffs, which will be implemented in 2023, will measure the carbon tariff base of traded products based on carbon labeling. At present, Europe, the United States, Japan and South Korea and other countries have successively implemented carbon labeling systems to guide low-carbon production and manufacturing from the consumer side. In the future, once the EU carbon tariffs are landed, Japan and South Korea and other places put forward carbon labeling requirements for traded commodities, which may restrict the mainland's export trade and aggravate the cost pressure of foreign trade enterprises.
First, "carbon labeling" may give rise to new trade barriers. Developed economies that are the first to improve the climate have successively implemented carbon labeling systems, and the influence and recognition of carbon labels on a global scale have been continuously improved. Once carbon labeling is widely used in international trade commodities, it is likely to be used by advanced economies to set up new technical and green barriers to trade. At present, the world's carbon labeling system is mainly implemented in developed countries such as the United States, Britain, Germany, South Korea, and Japan, and these countries that implement carbon labeling are the main export trading partners of the mainland at this stage. At present, the main trade products involved in the carbon labeling system in these countries are concentrated in labor-intensive commodities such as agricultural products, textiles and clothing products, which are also the main exports of the mainland in addition to mechanical and electrical commodities. From January to October 2021, the average proportion of agricultural products, textiles and clothing products in the total exports of the mainland was about 2.5%, 4.4% and 5.1%. Once developed countries open the mandatory carbon labeling requirements for imported goods, a "domino" effect may be formed, and carbon labeling will have a short-term impact on mainland exports to a certain extent in the future.
Second, the carbon footprint measurement and carbon label application implementation will increase the cost of foreign trade enterprises. On the one hand, the cost of in-house carbon footprint measurement and green production equipment upgrades has increased. In the process of promoting the carbon labeling system, there are problems that have not been clearly resolved, such as carbon data acquisition, carbon emission calculation, third-party qualification verification, and relevant laws and regulations. The carbon footprint needs to record the carbon emissions of all aspects of the entire life cycle of traded goods, which includes all chains from raw materials, processing, manufacturing, storage, trade, transportation, consumption, disposal and recycling. There are great challenges in data collection and calculation in all aspects, from upstream suppliers, midstream processors, downstream brand owners and manufacturers, the carbon footprint recording of the entire life cycle requires foreign trade enterprises to invest a certain cost, relying on data-based, process-based effective management to complete. It is estimated that the EU carbon label has a significant negative impact on mainland exports, especially textile exports, resulting in an average increase of 3% in the production of finished textiles in the mainland and an average decrease of 1.3% in exports to the EU. On the other hand, applying for a carbon label is not short and the cost is not low. Taking the European Union as an example, the cost of applying for carbon labeling is about 1200 euros, the annual fee of use is about 25000 euros / year, and the application time is generally not less than 24 months. In addition, the use of carbon labels by foreign trade enterprises to disclose carbon footprints may raise concerns, because the more trade products are produced, the greater the carbon emissions, and the carbon production costs and operating costs involved will be higher. But at the same time, we also need to recognize that displaying carbon labels and encouraging companies to use emission reduction technologies is a measure that is conducive to the long-term development of enterprises and will have positive guidance for enterprises and consumers.
(III) The pushback of low-carbon technology in foreign trade is the main challenge from "carbon tariffs" and "carbon labels"
Through the appearance of the impact of "carbon tariffs" and "carbon labels" on export trade, the green production technology of foreign trade enterprises is the challenge facing mainland exports. On the one hand, if "carbon tariffs" and "carbon labels" are used as means of trade protection, the scope of impact on export trade is not limited to China. ASEAN countries that also adopt high-carbon production technologies and have strong industrial complementarities with the mainland will also suffer from export shocks for labor-intensive and some mechanical and electrical products. On the other hand, the increase in trade costs in exporting countries caused by "carbon tariffs" and "carbon labeling" may be passed on to end-import consumers, resulting in higher prices in importing countries. As mentioned earlier, "carbon tariffs" and "carbon labels" will directly increase the cost of export commodities and raise the production costs of enterprises, for textiles and other weak technical substitution of goods, trade and production costs will not necessarily cause a significant reduction in export share, the promotion of imported commodity prices is more obvious, forcing export countries to upgrade green production technology, prompting major exporting countries to form a more unified green standard, to avoid bottom-by-bottom competition due to high pollution and low cost, is "carbon tariff" and "carbon label" The real demands of the dominant party. According to Michael Porter's dynamic competitive advantage theory, "Appropriate environmental regulation can inspire regulated firms to innovate and generate efficiency gains." Environmental regulation can have a positive impact on the international market position of domestic enterprises by stimulating innovation", and only when mainland foreign trade achieves technological upgrading and green production can it cross the trade barriers of "carbon labeling" and "carbon tariffs".
Fifth, the proposal for the transformation of mainland foreign trade under the carbon neutral policy
Under the global carbon neutral development trend, the mainland's trade in goods and services will open a new round of structural reshaping, and the development of foreign trade will face potential external challenges of imbalance and instability. To this end, in the process of promoting carbon neutrality policies, we should actively respond to international cooperation, enterprise transformation, technological upgrading, financial security and other aspects to achieve the development goals of "steady growth, innovation, smooth security and expanded cooperation" of foreign trade.
(1) Strengthen international and regional cooperation and improve low-carbon emission reduction mechanisms
Deepening international interregional economic and trade cooperation is an effective way to improve emission reduction mechanisms and upgrade green technologies. Safeguarding the multilateral trading system, upgrading free trade agreements, and deeply integrating into international and regional economic and trade cooperation can not only contribute to the development of the world economy, but also help to enhance the level of foreign trade development. Strengthening regional cooperation with countries such as the European Union, the United States and Japan can improve their production technology in the field of renewable energy. The introduction of low-carbon technology may have certain technical trade barriers, it is very necessary to carry out friendly international cooperation in the field of green and low carbon, carbon emission reduction and carbon neutrality are common challenges for all mankind, and the technology trade and service trade that are conducive to achieving carbon neutrality should be supported by free trade and cross-border investment. Through bilateral and multilateral trade agreement cooperation negotiations, explore the establishment of "common but differentiated" international trade carbon emissions standards and rules, and prevent "carbon tariffs" and "carbon labels" from evolving into green trade barriers or technical trade barriers. Through green investment along the Belt and Road and zero-carbon low-carbon technology trade, we will expand cooperation with countries along the Belt and Road in terms of green production capacity, green capital and green trade. In 2022, the RCEP will take effect, and in the future, China-ASEAN economic and trade cooperation will inject new momentum into the mainland's high-quality opening up to the outside world, strengthen cooperation and development in the field of green and low-carbon trade with the ASEAN region, and further promote the interconnection and integration of green technologies.
(2) Promote the upgrading of export industries and promote the transformation of foreign trade enterprises
It is necessary to further accelerate the structural upgrading and technological upgrading of export industries, increase investment in scientific and technological innovation and technological research and development, reduce production costs through green technologies, and increase the trade added value of export commodities. For industries with strong economic growth pulling effect, but large energy consumption and high emission intensity, it is necessary to promote the overall green upgrading of the industry, encourage the establishment of green and intelligent infrastructure, promote the improvement of low-carbon materials, the creation of production processes, realize the reengineering of industrial chains and industrial layouts, and form a set of environmentally friendly sustainable production methods. The export of high-tech and high-value-added commodities should be encouraged, the export rebate rate of green technology products should be moderately increased, the structure of export products should be adjusted and optimized, and enterprises with low green technology content and high carbon emission intensity should be guided to carry out industrial upgrading. For foreign trade production enterprises with high pollution and high emissions, through high pollution control costs, enterprises are forced to carry out green technology innovation, and environmental regulations are used to internalize the environmental costs of their export commodities, thereby promoting the transformation and application of energy-saving production technologies. At the same time, targeted subsidies can be used to support enterprises to purchase environmental protection facilities, encourage enterprises to carry out process innovation activities conducive to emission reduction, reduce energy consumption and pollution emissions in the industrial production process, and realize the green transformation and upgrading of export enterprises.
(3) Strengthen low-carbon R&D innovation and enhance the application of emission reduction technologies
Strengthening the research and development and innovation of low-carbon technologies and occupying the carbon-neutral and technological highlands are important means to achieve the transformation of green foreign trade. The central government requires carbon neutrality to be "first established and then broken" to avoid sports-style carbon reduction, so it is necessary to clearly compile the steps, strategic planning and landing processes for carbon neutrality. Make full use of the market mechanism to guide the innovation of low-carbon research and development technology, release price signals and provide incentive mechanisms for carbon emission reduction, guide funds to the research and development links with great potential for emission reduction, and promote green and low-carbon technology innovation and cutting-edge technology breakthroughs. Encourage green technology innovation such as carbon capture and carbon storage, deploy and plan carbon dioxide capture and storage projects in advance, and focus on breaking through the key core technologies of carbon neutrality in industrial production. Carry out carbon neutrality pilots and project development, produce more ecological products based on forestry carbon sinks and marine carbon sinks, and promote green carbon sink increase actions. At present, the R&D investment and scientific and technological conversion rate of the mainland green industry need to be further improved, and the proportion of R&D expenditure of environmental protection enterprises in operating income in 2020 is about 3.4%, far lower than the 15%-20% investment of developed countries in Europe and the United States. Therefore, on the one hand, it is necessary to strengthen the in-depth integration of "industry-university-research-funding", support scientific research institutions to establish green technology innovation project incubators, build green technology innovation consortiums with industrial parks, strengthen the market orientation of green technology, and improve the international competitiveness of environmental protection industry products; on the other hand, it is necessary to do a good job in the collection, analysis and evaluation of green technology, and promote frictionless docking between funds and industries, so as to promote the smooth transformation of green technology achievements.
(4) Improve financial security tools and improve the ability to resist risks
In accordance with the basic framework of developing the "three major functions" and "five pillars" of green finance, we should comprehensively build a foreign trade green financial service system, continue to promote carbon emission reduction to support the implementation of financial instruments, explore experience, and continuously improve. On the one hand, with the successive landing of carbon emission reduction financial instruments and special loan policies, "precise support and effective risk control" has become the core focus of improving carbon emission reduction financial security tools. Recently, the People's Bank of China announced the launch of a carbon emission reduction support tool, through the "first loan, then borrow" direct mechanism, according to the loan principal of 60% of the financial support, the interest rate of 1.75%. The State Council has set up a special refinancing of 200 billion yuan for the clean and efficient use of coal。 As of the end of the third quarter of 2021, the balance of local and foreign currency green loans in the mainland was 14.8 trillion yuan, of which the balance of loans invested in the clean energy industry was 3.8 trillion yuan, an increase of 710 billion yuan over the end of the third quarter of last year. While meeting the green financing needs of foreign trade enterprises, we will gradually establish a comprehensive import and export trade risk management system, enhance the risk identification of low-carbon transformation foreign trade enterprises, and improve investment security and effectiveness. Financial institutions should attach great importance to the risks brought by climate change to financial assets, take precautions, do a good job of risk assessment and stress testing, and prevent regional risks in the industry before high-carbon assets become shelved assets. At the same time, strengthen the supervision and information disclosure requirements of financial institutions, standardize business operations and approval processes, effectively strengthen the screening and risk control of carbon emission reduction projects, and avoid illegal operations of new project loans. On the other hand, the green bond regulatory mechanism has yet to be improved. The scale of green bond issuance in 2021 will be about 580 billion yuan, which has exceeded the issuance of last year's entire year, of which carbon neutral bonds have been issued more than 180 billion yuan. At present, the mainland only has the information disclosure template for the duration of green financial bonds, and the information disclosure of other green bond varieties needs to be further clarified. The difference in information disclosure of different varieties of green bonds will increase the difficulty of investors to obtain information and reduce the enthusiasm of investors. The 2017 Guidelines for the Conduct of Green Bond Assessment and Certification (Interim) do not specify specific operating rules, resulting in the absence of a unified standard for the third-party assessment and certification business, and the quality of various institutions is uneven, so it is necessary to standardize the certification standards of third-party assessment agencies to improve the credibility of certification bodies.
About the Author:
Lian Ping, Chief Economist of Zhixin Investment and President of the Research Institute
Chang Ran is a senior researcher at Zhixin Investment Research Institute
This article was first published in New Finance, No. 1, 2022