How China's digital technology development affects the environmental costs related to global value chains? Evidence...

China needs to address the environmental costs to participate in global value chains (GVCs) more sustainably. Digitalization presents a potential solution to overcome information barriers and improve energy efficiency in global production networks. However, the impact of digital technology on GVC-related carbon intensity has not been systematically studied. This paper utilizes embedded multi-regional input-output (EMRIO) tables to analyze the relationship between digital technology and GVC-related carbon intensity in China's 28 regions and 11 manufacturing sectors. The study calculates three indexes: digital technology development, the openness degree of digital technology, and the carbon intensity related to GVCs for the years 2002, 2007, 2010, and 2012. Through a fixed-effect model, the paper examines how digital technology can reduce domestic embodied carbon intensity related to GVCs in China. The findings indicate that: (1) digital technology development has a negative impact on GVC-related domestic embodied carbon intensity; (2) digital technology development indirectly reduces domestic embodied carbon intensity by decreasing energy consumption intensity and increasing foreign services' input intensity; (3) enhancing the openness of digital technology in China can strengthen the reduction effect of digital technology development on the environmental cost related to GVCs.