Two Sides of a Coin : The Economic and Environmental Effects of China's International Trade from a Global Value Chain Perspective

China has achieved rapid economic growth and international trade development through integration into global value chains (GVCs). However, integration has also resulted in massive greenhouse gas emissions, aggravating the pressure imposed by global climate change. Based on the World Input–Output Database, this paper studies the imbalances between the economic and environmental effects of China’s foreign trade, which are two sides of the 'trade coin', and analyzes the effects related to the different production activities of traditional trade and GVCs. Multiplicative structural decomposition analysis and the logarithmic mean Divisia index I (LMDI-I) approach were used to analyze the effects on the driving factors affecting the changes in value added per embodied emission import and export (VPI and VPX, respectively). First, during the 2000-2014 period, there were significant imbalances that led China to pay too much value added through imports and to overproduce carbon emissions through exports. Second, the large gap between China’s VPI and VPX was primarily due to the fact that developed economies gained much higher value added per embodied emission than China through exports in GVCs. Third, the increases in VPI and VPX in China during 2000-2014 were mainly driven by the decreasing emission coefficients of upstream economies and China, respectively. However, global industry linkages have a significant negative effect on the increase in VPX. Fourth, bilateral trade between China and developing economies is conducive to the decrease in VPI and the increase in VPX. Despite the comprehensive benefits to China’s economy and the environment in both imports and exports, China should take advantage of strategic opportunities such as the Green Belt and Road initiative to export cleaner production technologies to developing countries to help mitigate global climate change