How China's digital technology development affects the environmental costs related to global value chains? Evidence from regional manufacturing sectors

China needs to address the environmental costs to participate in global value chains (GVCs) more sustainably. Digita-lization presents a potential solution to overcome information barriers and improve energy efficiency in global produc-tion networks. However, the impact of digital technology on GVC-related carbon intensity has not been systematically studied. This paper utilizes embedded multi-regional input-output (EMRIO) tables to analyze the relationship between digital technology and GVC-related carbon intensity in China's 28 regions and 11 manufacturing sectors. The study cal-culates three indexes: digital technology development, the openness degree of digital technology, and the carbon in-tensity related to GVCs for the years 2002, 2007, 2010, and 2012. Through a fixed-effect model, the paper examines how digital technology can reduce domestic embodied carbon intensity related to GVCs in China. The find-ings indicate that: (1) digital technology development has a negative impact on GVC-related domestic embodied car-bon intensity; (2) digital technology development indirectly reduces domestic embodied carbon intensity by decreasing energy consumption intensity and increasing foreign services' input intensity; (3) enhancing the openness of digital technology in China can strengthen the reduction effect of digital technology development on the environ-mental cost related to GVCs.

Automated summary

China needs to address environmental costs for sustainable participation in global value chains. Digitization has the potential to improve energy efficiency in global production networks by overcoming information barriers. However, the impact of digital technology on GVC-related carbon intensity in China has not been systematically studied.