International competitiveness and potential for trade cooperation on clean energy between the USA and China

Abstract

As two super powers in energy consumption and carbon emission, the United States and China have been striving to develop clean energy in recent years. In this paper, we study the international competitiveness and potential for trade cooperation in clean energy between the two countries. This paper reveals that the United States has comparative advantages in terms of biomass energy and nuclear power, while China has comparative advantages in terms of solar energy and wind energy. The two countries have a strong complementarity in solar energy, biomass energy and nuclear energy with exporting from the United States and importing from China. In solar energy and wind energy a strong complementarity has been formed with exporting from China and importing into the United States. So the two countries have a strong potential for cooperation. Meanwhile, the potential trade cooperation is enhancing with the United States accelerating the development and exportation in natural gas. Therefore, the two countries have a strong trade complementarity on clear energy and a strong potential for cooperation in general. At the same time, the VCR model is built based on the clean energy Trade Complementary Index(TCIc and TCIu) between the United States and China. It can be found that the clean energy trade cooperation helps to curb CO2 emissions and promotes the GDP growth in the United States. However, China is in the early stage of clean energy development, the cooperation would cause a decline of GDP in China.