Evaluating carbon dioxide emissions in undertaking offshored production tasks: the case of China

Emerging economies like China, India, and Mexico are becoming the world's manufacturing leaders through the engagement in offshoring production activities. In achieving this status, however, they have met with difficult environmental issues. This paper features an analysis of industry-level panel data to examine the link between different offshoring tasks in China and carbon dioxide emissions. Through this analysis, the environmental effects of offshored production are addressed. Specifically an input output model is presented, thereby quantifying offshored production tasks in China. The results show that iron and steel, nonferrous metals (IS) and chemicals (CH) generate the most carbon dioxide during production of processed goods. Additionally, electrical machinery (EM) and general machinery (GM) generate a higher amount of carbon dioxide during production of parts and components. The results also show that those industries characterized by higher energy consumption have higher carbon dioxide (CO2) emissions induced by offshoring. Given these results, it seems that any solutions geared "towards reducing the energy consumption of entire manufacturing industries would be useful. Furthermore, the results of the analyses presented here indicate that China would be responsible for working with developed countries to reduce carbon dioxide emissions through cooperative environmental regulation. A globalization perspective is adopted to offer unique insight into the environmental issues faced by China. The results of this paper would provide quantified, actionable information for formulating practical industrial policies geared towards reducing carbon dioxide leakage. (C) 2015 Elsevier Ltd. All rights reserved.