Research on Unsustainable Embodied Oil Leakage and Its Influence Factors in China’s Export Trade

Over the past few decades, China has “leaked out” massive oil resource through exporting different kinds of products, which intensified the county’s energy dilemma and obviously is unsustainable. The aim of this paper was to calculate the total and industrial amount of oil embodied in China’s export during 2002~2012 and to analyze its influence factors. An exported embodied oil model was built based on the Input Output Analysis, and the influence factors of embodied oil were decomposed into energy utilization technology, export structure and export scale on the basis of the Structure Decomposition Analysis. The results indicated that the direct and the complete oil consumption efficiency in 2012 are lower than that in 2002. The total exported embodied oil grows from 0.58 × 108 tons in 2002 to 1.11 × 104 tons in 2012, which accounts for a large percentage of the domestic oil consumption. The enlargement of export scale is the main positive promotion for embodied energy increase in exports during 2002~2007 and 2007~2012, and the energy utilization technology is the key factor for the part of negative influence in embodied energy decrease. Though the export structure factor doesn’t play a key role in embodied energy change in exports, comparing with the other two factors, it has substantial potential for decreasing the exported embodied oil. Finally, policy suggestions were proposed based on the results to improve the situation.


Introduction
After the accession to the World Trade Organization (WTO), China's integration with the global economy has contributed to sustained growth in international trade. Both its exports and imports have grown faster during the past dozen years, while China's trade surplus increased dramatically. Although this trend was affected by the global financial crisis and the international political volatility, the Chinese government has made some plans recently to promote the economic prosperity, including "Silk Road Economic Belt and the 21st-Century Maritime Silk Road" [1] and "Made in China 2025" [2], and so forth. Under these background, China's export trade will keep on developing predictably. On one hand, the huge trade surplus has brought China a great amount of foreign exchange reserve; on the other hand, it also cost China significant volumes of energy [3], because all goods and services produced in an economy are directly and/or indirectly associated with oil use [4].
The debate on the impacts of international trade on energy flow is not new. Many researchers have studied the embodied energy/carbon imports or exports for a number of countries and regions, such as Brazil [4], China [5], the United Kingdom [6], and the United States [7], and so on. These studies show that there are a lot of energy flow embodied in the international trade, which is not often considered and still not sufficiently clear. In China's energy supply system, oil highly dependent on import, and the gap between its consumption and production has been increasing quickly. At the same time, with the continued growth of international trade, China are "leaking" a large number of oil through exporting different kinds of products, which is unsustainable. It is significant and urgent to answer the questions including, but are not limited to: How many embodied oil are exported? Which export industrial sectors are most oil-consuming? What is the major driving force factors of the increase for the embodied oil export? The aims of this paper focus on calculating the amount and the pathway of oil flow embodied in China's export trade by using the Input Output Model and the Structure Decomposition Analysis. The study hopefully offers consultations for a sustainable development and management of China's international trade.

Basic input output model
The Input-Output Analysis was firstly developed by Leontief in the 1930s, which has been widely used for analyzing the economic relationship of linkages between different sectors. The basic Input-Output Model can be expressed as equation (1): Where, X and Y represent exogenous and endogenous accounts respectively, I is identity matrix, and A is the technical coefficient matrix that can be expressed as equation (2): Where I = (1,n); j= (1,n); n is the count of sectors in an economy system; a ij is the technical coefficient, also called as direct consumption coefficient, which can be expressed as equation (3): Where, x ij is marked as sector j's use of products from sector i; and x j is marked as the total output of sector j. The matrix (I -A) -1 is often called Leontief Inverse Matrix. Another important conception in the basic Input Output Model is complete consumption coefficient, denoted by b ij , which measures how much direct and indirect output from sector i will be used in sector j's one unit worth of value of final output. It can be expressed as equation (4): Where, k means the middle sector. If the complete consumption coefficient matrix is set as B, i.e. , the equation (4) can be solved and transferred to equation (5):

Exported embodied oil model
Based on the basic Input Output Model, the model for calculating oil flow embodied in international trade can be established as equation (6): Where, EO is the amount of embodied oil in international trade; eo i is the amount of embodied oil in one unit worth of value of product i, i.e. embodied oil intensity; V i is the total value of product i, in import or export trade. Before calculation the technical coefficient matrix A should be modified to eliminate the influence of the processing and manufacturing trade, for example, some products are made by imported semi-finished products and be exported again after assembled. Firstly, A can be distinguished to two parts: the imported middle products part A m and the domestic middle products part A d , i.e., A = A m + A d . Secondly, the import coefficient matrix M is set to establish equation (7): Where, M is a diagonal matrix that can measures the dependence of sector i on the imported middle products, and the element of the diagonal matrix, marked as m ii , can be expressed as equation (8): Where, X i is the total output value of sector i, im i is the total import value of sector i and ex i is the total export value of sector i. It is assumed in this analysis that the share of imported products in every sector are same. Finally, the model of calculating exported oil flow embodied in international trade can be expressed as equation (9):

Structure decomposition analysis
Based on the exported embodied oil model, the Structure Decomposition Analysis can be continued: firstly, set ( ) , which is complete oil consumption of sector i; where ex i is the total export value of sector i as mentioned above, EX is the total export value of the country, and, so, s i is the share of sector i's export value on the total export of the country. Then, the exported embodied oil of sector i can be transferred to equation (10): The amount of exported embodied oil are divided by this equation into three parts: the complete oil consumption coefficient, the structure of export and the scale of export, which are called the technology effect, the structure effect and the scale effect. The change of the exported embodied oil from time t1 to time t1 can be expressed as equation (11): Equation (11) can be solved by using the Logarithmic Mean Divisia Index (LMDI) method. The solution are shown as equation (12) Where, eff i t , eff i s and eff EX represent the influence effects of the export embodied oil changes caused by technology, the structure of export and the scale of export.

Data
The oil consumption, the total output value of every industry, the technical coefficient matrix A between all industries and the import/ export value of every industry are needed to calculate the embodied oil flow. All of the data above are available from China's statistical yearbooks and China's Input Output tables that both released by the National Bureau of Statistics of China [8]. Classification of industries are different between the two data sources, so it should be modified for consistency. Twenty-eight industry sectors are used in this study, as shown in Table 1

Results and Analysis
Crude oil utilization efficiency The oil utilization efficiency, i.e. oil intensity, is indicated by two indicators in this paper: the direct oil consumption coefficient and the complete oil consumption coefficient. The results of the oil utilization efficiency in 2002, 2007 and 2012 are shown in Table 2

Amount of exported embodied oil
According to the model built above and annual data, the amount of oil embodied in China's export trade of all industry sectors are calculated as shown in Table 3. The total domestic oil consumption in China and the proportion of exported embodied oil on the domestic consumption are also displayed in Table 3. With the rapid development of China's export, export of "Made in China" especially, the amount of exported embodied oil is also grown. It can be seen from Table 3 that both the total domestic consumption of oil and exported embodied oil have massive growth from 2002 to 2012. The growth rate of exported embodied oil is 110%, which approximately equals that of domestic consumption (107%). In 2007, the percentage of exported embodied oil is around 34%, which means there are about 34% of China's oil consumption are contributed to other countries through international trade. But the trend has revealed a clear decline trend after 2007. The main reasons include but not limit to: implement of China's Energy Saving and Waste Reduction Plans made the energy use per unit GDP decline, the Global Economic Crisis affected China's export trade scale, and China's export structure were improved in recent years (Table 3). From the perspective of individual industry sector, the contributions of exported embodied oil vary widely, as shown in Table 4

Influence factors of embodied oil
The change on the amount of embodied oil in international trade are derived from combined action of three effects (technology, structure and scale) by using the Structure Decomposition Analysis method.

Direct Coefficient
Complete Coefficient     The results of the analysis on embodied oil between 2002~2007 and 2007~2012 are displayed in Table 5. It can be seen from Table 5

Conclusions
The and 51% respectively. The export scale effect is always the major part of positive promotion, while the technology effect is the major part of negative influence. The export structure has lesser impacts, comparing with the other two effects. The oil flow embodied in international trade and its influence factors should be considered during the development and management in the future.