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[This chapter examines the changing position of China within the global shift of environmental burdens. This chapter revisits the pollution haven hypothesis from an innovative perspective. It argues that economic growth does not always reverse the pollution haven behaviour, even if one economy shifts from low-income to high-income. Instead, economic catching-up exposes one economy to a risk of converging pollution contents in trading products. Then, the trade of catching-up economies with both developed and developing economies generates significant pressures on the domestic environment. This chapter proposes the term “pollution trap” to define this phenomenon. Based on the case of China, this chapter applies the multi-regional input-output analysis to trace the distribution of pollution embodied in China’s foreign trade. Then it further uses the fixed effect model to examine the causes of the “pollution trap” phenomenon. Empirical evidence from China supports the existence of the “pollution trap”. Environmental regulation keeps China from becoming a pollution haven of developed economies rather than relocating polluting production to other developing economies. Furthermore, the current intra-industry trade of low value-added products worsens China’s environmental performance. The diluting advantage of labour and the accumulating advantage of capital keep China specialising in polluting production.]
Published: Oct 18, 2020
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