Manufacturing Pollution in China: The Roles of Composition Change and Technique Improvements

April 2017

Abstract:
Despite rapid economic growth from 2007 to 2010, China has experienced a continuous drop in the emission of three in four manufacturing pollutants. This paper decomposes the change in Chinese manufacturing pollution into scale, composition, and technique. The results show that Chinese manufacturing industries achieved pollution abatement by specializing in producing clean goods. The decomposition of Chinese international trade also finds evidence that China satisfies its demand for polluting intensified goods by trading with other countries. This evidence is contrary to the conventional wisdom that China provides dirty goods to developed countries like the US and the EU. It might suggest that China is under the transition from polluting goods supplier to polluting good consumer.

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