Embodied energy, export policy adjustment and China's sustainable development: A multi-regional input-output analysis

China has surpassed the United States to be the world's largest energy consumer, but a lot of energy was used to produce products for exporting to other countries. Presently, China faces a great challenge in energy security and environmental protection. This paper focuses on the energy embodied in China's foreign trade with a multi-regional input-output approach. Three versions of the GTAP (Global Trade Analysis Project) database were used to capture the trend and distribution of the embodied energy flows for China during 2001-2007. The results indicate that the energy embodied in the global trade is increasing rapidly, growing faster than the total direct energy exported in the same period. China is shown as an energy exporter in terms of embodied energy, and the embodied energy trade surplus increased from 156 million tons of oil equivalents (Mtoe) in 2001 to 514 Mtoe in 2007, with a proportion of domestic energy consumption increased from 14% to 23%. This paper also studies the effects of the energy-intensive industry restrictive export policy of China, and we find that this policy could reduce the national energy consumption and promote industrial structure upgrades effectively. However, the expansion of energy-intensive industries in other countries may reduce China's efforts for global energy saving and global warming alleviation. Our simulation shows that carbon leakage is about 50%.