Relational Global Value Chain Carbon Emissions and Their Network Structure Patterns: Evidence from China

Abstract

The structure of the network among firms participating in global value chains is an important factor in understanding the changes in China’s carbon emissions. This paper focuses on the interdependence between firms and the interconnected networks to which they belong, utilizing an inter-country input–output model that distinguishes between domestic-owned enterprises and foreign-invested enterprises for measurement purposes. By distinguishing between domestic and cross-border global value chains, we illustrate the carbon emission effects of relational global value chains and their network structures, thereby contributing a Chinese perspective on relational global value chains and carbon emission reduction. This study reveals that (1) relational global value chain activities have emerged as a significant contributor to China’s carbon emissions, constituting approximately 26.8%, with its growth mainly stemming from the expansion of domestic global value chain emissions. At the sectoral level, relational global value chain activities lead to higher carbon emissions from the service sector than from the manufacturing sector. (2) Domestic global value chain relationship activities are more likely to have favorable economic and environmental trade-offs, as evidenced by the lower carbon intensity of the domestic global value chain than the cross-border global value chain. The circle-structured relationship activities between domestic-owned enterprises and foreign-invested enterprises are associated with more sustainable carbon emission growth and greater potential for emission reduction than the chain structure. (3) Structural decomposition analysis indicates that the impact of cross-border global value chain emissions on China’s carbon emission growth has been decreasing since 2012, while the influence of the domestic global value chain is on the rise and surpasses that of the cross-border global value chain by the end of the period.