title: Adjusting export tax rebates to reduce the environmental impacts of trade: Lessons from China.
abstract: Export tax rebates are an important policy instrument for stimulating exports, which many developing countries make use of. However, excessive export tax rebates and inappropriate structural arrangements can lead to over-production in highly polluting industries and cause the environment to deteriorate. This paper, taking China as the study case, tests and verifies the statistical significance of the causal relationship between export tax rebates and pollution emissions. With a computable general equilibrium modeling, the current study further analyzes the effectiveness of export tax rebate adjustments aimed at alleviating environmental pressure for different time periods. It is found that before 2003, export tax rebates primarily promoted exports and boosted foreign exchange reserves, and highly polluting sectors enjoyed above-average export tax rebates, which led to increased pollution emissions. Between 2003 and 2010, the export tax rebate system was reformed to reduce support for the highly polluting export sectors, which led to decreases in emissions. Canceling export tax rebates for highly polluting sectors is shown to be the most favorable policy choice for improving the environmental performance of China's international trade. This study can serve as reference for other developing countries which similarly rely on export tax rebates, so that they can adjust their policies so as to combine economic growth with pollution control.
authors.affiliation: School of Environment, Center for Global Environmental Policy, Beijing Normal University, Beijing 100875, PR China; School of Public Affairs, Chongqing University, Chongqing 400044, PR China.
authors.forename: Peng
authors.initials: P
authors.lastname: Song
authors.affiliation: School of Environment, Center for Global Environmental Policy, Beijing Normal University, Beijing 100875, PR China.
authors.forename: Xianqiang
authors.initials: X
authors.lastname: Mao
authors.affiliation: School of Environment, Center for Global Environmental Policy, Beijing Normal University, Beijing 100875, PR China. Electronic address: maoxq@bnu.edu.cn.
authors.forename: Gabriel
authors.initials: G
authors.lastname: Corsetti
mesh_terms: D000397:Air Pollution / Q000032:analysis; D002681:China; D003132:Commerce / Q000379:methods*; D057217:Economic Development; D004777:Environment; D004787:Environmental Pollution / Q000191:economics* / Q000517:prevention & control*; D007221:Industry / Q000191:economics; D018803:Models, Economic; D013660:Taxes / Q000191:economics*
keywords: China; Computable general equilibrium model; Environmental impacts; Export tax rebates; Highly polluting sectors