ABSTRACT
The potential of China’s export duties to combat climate change has received inadequate attention in the literature on China—Raw Materials or China—Rare Earths. This neglect is unfortunate because a number of climate studies, including the Stern Review on the economics of climate change and a World Bank research paper, have suggested that export duties could be useful for curtailing carbon leakage. These policy recommendations are also acknowledged in a World Trade Organization (WTO) working paper. Thus, certain Chinese export duties in the past were applauded by some commentators as a promising means to confront the country’s carbon leakage problem. This practice was also recorded in China’s second communication to the United Nations Framework Convention on Climate Change (UNFCCC). This chapter shows that the WTO ban on Chinese export duties would undermine global efforts to fight climate change. On the one hand, export duties could be a more feasible alternative to the import carbon tariffs. On the other hand, China, as the largest emitter and exporter of carbon emissions, has incentives to genuinely adopt export duties as part of its demand-side climate policy targeting consumption.
