Substantial Nitrogen Oxide Pollution Is Embodied in the Bilateral Trade between China and the European Union

Against the backdrop of globalization and trade facilitation, the products consumed by a country are more and more relying on the importation of those products from other countries. Therefore, the pollutant emissions of products associated are transferred from consuming countries to exporting countries, which significantly changes the spatial distribution of global pollutant emissions. The objective of this research is to analyse the embodied nitrogen oxide (NO_x) emissions in the trading process between China and the European Union (EU) and to further trace the interindustry and intercountry transfer paths. This study constructs a multiregional input-output (MRIO) model based on the latest EORA global supply chain database. The MRIO model quantitatively analyses the total NO_x emissions from the production and consumption ends of China and the EU from 1995 to 2014. Important findings are derived from the empirical results as follows. (1) In 2014, China's production end emissions were 1824.38 kilotons higher than those of the consumption end. By contrast, the situation in the EU was the opposite, i.e., production end emissions were 1711.97 kilotons lower than those of the consumption end. (2) In the trade between China and the EU, the EU is a net importer of embodied NO_x, and China is a net exporter of embodied NO_x. In 2014, 2.55% of China's domestic NO_x emissions were transferred to the EU in China-EU trade, accounting for 2.75% of China's domestic consumption demand. (3) In 2014, Electricity, Gas and Water (397.75 kilotons), Transport (343.55 kilotons), Petroleum, Chemical and non-metallic Products (95.9 kilotons), Metal Products (49.88 kilotons), Textiles and Apparel (26.19 kilotons), are among the industries with the most embodied NOx emissions from China's net exports during its two-way trade with the EU. (4) In the bilateral trade between the EU and China, many countries are in the state of embodied NO_x net import. The top three net importers in 2014 were Germany (169.24 kilotons), Britain (128.11 kilotons), France (103.21 kilotons).