China-European union trade and global warming

The globalization of trade has numerous environmental implications. Trade results from a geographic separation of consumption and production. This creates a mechanism for consumers to shift environmental pollution to other countries. China is now the world third biggest trader and the second biggest trade partner of EU. China has also overtaken the U.S. as the world biggest CO₂ emitter since 2005. As China's biggest trade partner, EU has a large trade deficit with China, but on the other hand, CO₂ emissions embodied in Sino-EU trade are much more unbalanced than the trade imbalance itself. EU avoided a huge amount of CO₂ missions through trading with China. This lowers CO₂ emissions in the EU and facilitates EU meeting its CO₂ emission reduction targets, but it creates additional environmental burdens for China. In this paper, the dual imbalances between China and the EU, its mechanism, and policy implications will be presented.