“China’s trade in climate smart goods: an analysis of trends and trading patterns”

Trade and investment have positive effects on economic growth and development, especially for developing countries, where trade openness could play a crucial role to eliminate poverty. But in the same way trade and investment can also harm the environment by producing GHG, pollutions and other environmental negative externalities. Since economic development, trade and environment are elaborately interconnected, it is indispensable to amalgamate environmentally affiliated issues on the development agenda. With expansion of economic activities and trade on the one hand and consequent threats to the environment on the other, the question of environment-friendly trade has emerged as a serious policy agenda in recent years. In that context, trade in climate smart goods (CSGs) is assumed to play a significant role in promoting sustainable development pathway. Given that China’s global trade is expanding at an unprecedented scale, the present paper is designed to analyze the trends and trading patterns of China’s trade in CSGs with the rest of the world. Based on the collected data covering the period of 1992 to 2016 from UN Comtrade, the analyses indicate that total trade in CSGs by China has been increasing, but its share in total trade volume is still very low. It is understood that China’s exports and imports of CSGs are dominated by a few products, namely photosensitive semiconductor devices (854,140), static converters (850,440), articles of plastic and arts of other material (392,690), photovoltaic system controller (853,710), discharge lamps, fluorescent (853,931), parts of electric motors, generators, generating sets and rotary converters (850,300), machine and mechanical appliance (847,989), other lead-acid accumulators (850,720), prism, mirrors and other optical elements unmounted (900,190), cooking appliances and plate warmers (732,111), gears and gearing, other than toothed wheels (848,340), other machinery, plant and equipment (841,989), filtering or purifying machinery and apparatus for gases (842,139), etc. While the major trading partners of China for CSGs are the USA, Japan, India, Malaysia, Germany, Korea Republic, Singapore, Thailand, Vietnam, the Netherlands, Hong Kong, Russia, Brazil, Australia, Pakistan, Israel, among others.


INTRODUCTION
The Global economy is growing fast and at the same time global inequality is also rising simultaneously. We dream of a world where there will be no poverty and inequality. To create this type of idealistic world, we need to focus on growth and development patterns that are economically, socially and environmentally sustainable. International trade is one of the most important indicators for achieving high economic growth in today's world. On the one hand, by extracting and using excessive natural resources, a country could achieve higher levels of economic growth and development that at the same time also promote higher level of pollutions; on the other hand, high economic growth and development also make people aware of the environment and encourage them to use environmentally preferable goods and services. So trade and the environment have a contradictory relationship.
Few emerging developing countries like China engage all their efforts and resources to achieve high economic growth. Nowadays, China is considered a global economic giant because of its gigantic economy size and also huge population, wide territory and vast natural resource stock. By the rising share of GDP and trade, China has become more and more integrated into the world economy. China's rapid economic growth mainly depends on increased capital investment, promotion of international trade, a cheap and growing labor force, rich natural resources, and a huge domestic consumer market.
China is a big country consisting of twenty two provinces, five municipalities, four autonomous regions and three special administrative regions. It has a large population, one fifth of the world. Though the Chinese economy has experienced some regional disparity because of its wide territory and large population, this does not affect its economic growth. The economy is growing fast, which is reflected from its vibrant trade performance (Sun et al., 2010). After 1949, the consumption of mineral resources and GDP has expanded 40 times and 10 times, respectively. Throughout the past 50 years, particularly during the last 20 years, the Chinese economy has shown remarkable growth. Its annual average GDP growth rate is 14.98 percent, which makes the country the second largest economy in the world by nominal GDP and the largest economy in terms of purchasing power parity. Its average export growth rate is estimated to be 16.43 percent. If one compares its GDP growth rate and export growth rate, it may be concluded that China's involvement in foreign markets is excessively higher than its own rate of growth (Valadez et al., 2016;Qian, 2012). If this growth process continues, it is projected that China would be the world's largest economy by 2030 in terms of nominal GDP.
Though the Chinese economy has experienced extraordinary economic growth, but at the same time, it is facing severe environmental problems. China's eco-environment is terribly affected by its tremendous economic growth. To mitigate these environmental problems, the government of China has adopted several environmental programs. They have taken environmental protection and sustainable development programs as a national principle and national strategy, respectively. Though the government has been trying hard and taking various initiatives to improve their environmental conditions, but its environmental performance index still ranks lower among other countries in the world (Liu et al., 2010). China 1 is the producer and consumer of a large quantity of industrial and agricultural products. Among them steel, fertilizers, cement, television sets, food from aquaculture are mentionable. We all are aware that all these products are greatly responsible for CO2 emissions. The rate of growth of these industrial and agricultural sectors is exponential. This exponential growth rate leads to substantial environmental damages in many regions of the country. Agriculture sector is also responsible for extensive environmental pollution, because agricultural production is heavily dependent on the use of fertilizers and pesticides (Wang, 2015). In the current world, China is the largest CO2 emitter and its emissions exceeded the EU's ones in 2003 and the US's emissions in 2005. So it is an urgent need for China to reduce its current level of CO2 emissions. The government of China adopts several measures to protect the environment. Still, in spite of these attempts, production, consumption and transportation of raw materials and products enormously pollute the environment and have led to a variety of environmental challenges (Liu et al., 2010). To reduce this pollution level and achieve sustainable growth and development, the country should follow an environment-friendly development pathway, which generates low environmental pollutions and carbons. 1 Climate smart goods are defined as components, products and technologies, which tend to have relatively less adverse impact on the environment. It constitutes low carbon technologies such as solar photovoltaic system, wind power generation, clean coal technologies and energy efficient lighting. These goods and technologies allow for production process that has no or minimum greenhouse gas emission and negative impact on the environment and are at least economically efficient and acceptable. The term "climate smart" was chosen over the previously used classification of climate friendly owing, namely to the fact that many goods and technologies contained within the UNESCAP list are not only friendly to the climate but also contribute to fostering climate smart development by improving adaptive capacity such as by conserving water or by improving access to energy. This study takes into account 64 climate smart goods under HS 6 digit code defined by APEC. The list is arrived by defining concordance series from series of list given by the World Bank, ICTSD, WTO, APEC, and OECD (Mathur, 2011).
Against this backdrop, trade in climate smart goods (CSGs)1 assumes high importance in today's world.
The main objective to promote CSGs is to reduce environmental damages. To achieve sustainable growth and development, it is necessary to focus more closely on the trade and investment in climate smart goods and services. A research question of the present paper thus has been to examine China's trade in CSGs, its trends and trading patterns with the rest of the world and draw some policy implications for China and other countries.

LITERATURE REVIEW
Number of studies are found to have analyzed the trends and trading patterns of trade in environmental goods (EGs) and climate smart goods (CSGs). But most of them focused on the global and regional trends and trading patterns of EGs and CSGs. UNESCAP (2011) observed the global and regional trends and trading patterns of CSGs. Duy (2010) revealed that in developing countries, trade liberalization would be harmful to the environment. According to the study, the unrestrained environmental regulation in most developing countries is one of the main reasons behind this environmental hazard through trade.
As environmental regulations are more stringent in the developed countries, so it is economically more viable for the developed country investors to transfer their pollution-intensive industries to the investment hungry developing countries. As a result, pollution level generally is increasing in the poor developing countries. Zhang (2011) talked about trade liberalization of environmental goods, but focused on the market creation of environmental goods in developing countries. According to Zhang, in most of developing countries, market for environmental goods is not big enough to trade concern. Trade liberalization of environmental goods has no significant impact if the market is not sufficient. So it is necessary to create a market for environmental goods in developing countries. The study also opined that fewer products, which are harmful to the environment, should be banned and the list of climate-friendly goods which is universally agreed should be introduced. Antweiler Figure 2 shows the similar trends here too with both export and import of CSGs increased over time.

FINDINGS AND DISCUSSIONS
In case of import, in 1979, China's import was $ 18 billion and in 2017, it stood at $ 1.8 trillion. In 2017, China's major merchandize import items were electrical machinery and equipment, mineral fuel, nuclear reactors, ores, slag and ash, plastics,  In 2011-2012, the import trend of trade in CSGs was quite higher than in the previous year. But, after that it started to fall. Some surprising situations were observed in 2015 and 2016. Imports of CSGs fell drastically during these years.
China's export basket of CSGs consisted of manufactured goods, of which electrical and electronic  From Figure 4 it can be observed that total export value was more than the total import value of China. This indicates a strong performance of Chinese economy during this period. By compar-ing the total export and import values with the total CSGs export and import values, one can see that the contribution of CSGs was very poor compared to total export and import volumes of China for the period. As China is the biggest CO2 emitter, so the country needs to take some initiative to reduce its emission levels. It should also focus on expanding its trade in CSGs with the rest of the world.

Patterns of trade in CSGs between China and the rest of the world
China's significant amount of export value for the top ten climate smart goods are coming from few countries such as the USA, Germany, Japan, Brazil, Note: Base for overall imports was considered from the left to right (along the X-axis), while for climate smart goods, it's been right to left in the figure.     Of these ten items, machine and mechanical appliance took the top positions and held the major shares of import value, which is 153515724.9 thousand USD. Photosensitive semiconductor devices and static converters took the second and third position, respectively. The combined import value of these three items were 278287271.1 thousand USD. The remaining products' share was 163640402.1 thousand USD.
In 1992, China's overall export was $ 84,940 million and in 2016, it stood at $ 2,097,632 million, whereas, its import was $ 80,600 million in 1992 and in 2016, it was $ 1,587,925 million. The volume of export is higher than that of import. In 1992, China's CSGs export and import were $ 1.21 and $ 2.96 million, respectively, and in 2016, it was $ 85.28 and $ 2.45 million, respectively. The volume of exports of CSGs was much higher than that of the imports of CSGs. Though the total volume of merchandize export and import and the volume of export and imports of CSGs were found to be increasing, but the shares of CSGs' export and import values were quite negligible compared to total export and import value.   Figure 8 compares the share of total volume of export and import of CSGs with the shares of the top ten CSGs. From the figure, one can see that initially, that means from 1992 to 2003, the share of both export and import values of CSGs were very negligible and the share of export and import values of the top ten CSGs were also negligible. Since 2004, the share of export and import values of climate smart goods and share of the top ten CSGs increased continuously. But after 2007, the share of the total CSGs' export value and the share of the top ten CSGs' export value have increased much higher than the share of the import value of the CSGs and the top ten CSGs import value. In 2015, the share of import of CSGs and the share of the top ten CSGs' import values fell drastically and continued till 2016. The reason behind this sudden fall may be attributed to increasing environmental awareness among the Chinese government and its people and their pro-active initiatives in the front of policy, production and consumption of more CSGs.

CONCLUSION AND IMPLICATIONS
The main objective of this article has been to observe the trends and trading patterns of trade in climate smart goods between China and the rest of the world. By using descriptive statistics, the paper found that in case of trade in climate smart goods by China, an increasing trend had been observed for the period of 1992 to 2008, but after 2008, no specific trend was found; it was quite fluctuating. More specifically, in case of import of climate smart goods by China, an increasing trend had been observed from 1992 to 2008, but after 2008, it was quite fluctuating and surprisingly fell, quite drastically during 2015 and 2016. But in the case of export of CSGs, a smoothly increasing trend was observed. It is understood that China's exports and imports of climate smart goods are largely characterized by the presence of both developed and developing countries as its trading partners. It is also found that although China's exports and imports of the top ten CSGs are almost the same category, but the diversity within a broad category of products (at 6 digit level) is clearly visible in its trade in CSGs. It is also clear that the country exports of CSGs are far higher than its imports, mainly because of its consciousness on the possibility of producing more such commodities locally and also its increasing demand for CSGs for numerous adaptation and mitigation measures that the country has been adopting in recent years quite in an aggressive manner. Total CSGs Export Value Top 10 CSGs Export Value Total CSGs Import Value Top 10 CSGs Import Value