Dynamic Change in the Export Technology Structure of China ’ s Environmental Goods and Its International Comparison

Growing natural disaster intensity, ocean warming, air quality alerts, and a desire to emphasize sustainable practice has prompted countries to payincreased attention to the development of environmental industries. This has led to trade in environmental goods (EGs) and a need for export technology research. The purpose of this paper is to measure the evolution of the technological structure of China’s export EGs and its position in the international industrial value chain. Based on the 2012 Asia-Pacific Economic Cooperation (APEC) EGs list and United Nations Comtrade (COMTRADE) data, this study uses the technical complexity index to empirically calculate the technology structure and level changes of China’s EGs exports from 2007 to 2016. The results are then compared with those of the Asia-Pacific region and the world’s major exporters of EGs. Additionally, this study proposes a method called “Equalization Technology Classification” that divides all EGs into five technical levels: high, medium-high, medium, medium-low, and low. The research finds that (1) China’s EGs exports are predominately of medium-low technical complexity, and while the proportion of exported goods with high technical complexity is very low, the export technology structure is constantly being optimized. (2) Compared with Singapore, the United States, and the European Union, the overall technical level of China’s exported EGs is lagging behind. (3) The overall technical level of exported EGs in major exporting countries is rapidly increasing but is especially impressive in South Korea and China, where growth ranks first and second in the world, respectively.


Introduction
Environmental goods (EGs) are products that provide measurement, control, and restriction functions for ecosystem problems such as soil destruction, waste, noise, and water and air pollution [1], as well as goods that embrace power from the environment (e.g., oil spillage clean-up equipment, air cleaning machines, compacters, solar panels, and wind turbines).Global warming and environmental pollution are becoming more and more serious, and countries are paying increased attention to the development of environmental industries.Correspondingly, the world EGs trade is growing at a faster rate than all other goods and is making great contributions to protecting the natural environment and promoting global economic development [2].China is an important driving force for the development of EGs trade in the world.In 2016, its export of EGs accounted for 10.92% of world exports, ranking first in the world [3].
However, China's economy has entered a new stage of "made in China", demonstrating a quality revolution.The quality of export commodities is more important than quantity [4].In recent years, China has actively integrated itself into economic globalization by taking advantage of its low labor costs.Many industries in China are already leading the world in export volume [5].Economic theory and international development experience demonstrate that sustainable economic growth is inseparable from the continuous optimization of export technology structure [6].Fan et al. [7] found a downward trend in the proportion of low value-added products in China's export structure, and those with medium value-added have gradually become the main export.This brings forth the question of whether the evolutionary trend of China's EGsexport technologyis the same as that of China's export technology?To this end, this paper will empirically measure the changes in China's EGs export technology.
Previous studies have focused on trade liberalization, EGs lists, and export technology measures.Rui et al. [8] found that EGs trade liberalization can have a positive spill-over effect on the global environment.In 2001, the Doha Declaration of the World Trade Organization (WTO) initiated negotiations on the liberalization of trade in EGs.However, members expressed differences of opinion on issues such as negotiation methods, product lists, and differential treatment.Therefore, the negotiations progressed slowly.Despite this, regional EGs negotiations have continued.The number of WTO regional trade agreements (RTAs) increases every year, many of which involve tariff reductions for EGs [9].In 2012, the Asia-Pacific Economic Cooperation (APEC) Leaders Declaration proposed a list of 54 6-digit Harmonized Code EGs, and members reached a consensus on reducing tariffs on EGs [10].The APEC list has been significantly streamlined compared to the Organization for Economic Co-operation and Development (OECD) list and has added clean technologies and renewable energy products [11].In 2014, 14 WTO members, including the United States, China, the European Union, and Japan, launched a new round of EGs agreement negotiations using the APEC list to discuss the issue of global EGs trade liberalization.Today, the WTO EGs negotiations have not yet resulted in an agreed upon final list.Considering that these negotiations are based on the 2012 APEC EGs list, this study will measure the technical level of exports based on EGs found on the 2012 list.
Guan et al. [12] proposed the technology-added value method for measuring export technology.Lall et al. [13] then proposed a complexity index method, and Du et al. [14] revised the method.Hausmann et al. [15] proposed the use of "product-relevant income levels" (PRODY) to determine the level of product labor productivity, also known as the technical complexity index.What these methods have in common is that they first determine the technical level of a single product, then calculate the overall technical level of the economy and assign the technical content of the product to the weighted sum of the income levels of countries (or regions).The difference between these methods is themeasure and assignment of weight.Valuation weights of Guan et al. [12] and Lall et al. [13] are the world share of various products exported by various countries.Du et al. [14] revised the weight method to the world share of various types of products produced by various countries.The valuation weights of Hausmann et al. [15] are the export comparative advantage index after standardization of various products in various countries.In comparison, the application of the technical complexity method of Hausmann et al. [15] is more common, and the research data is more acquirable.These application areas involve cultural and creative industries, manufacturing, agriculture, etc., but there is a lack of research on the technical level of product export in the environmental industry [16][17][18].To this end, this paper chooses the technical complexity method of Hausmann et al. [15] to empirically measure the dynamic changes of China's EGs export technology.The Hausmann et al. [15] method does not classify PRODY values.This study proposes a method called "Equalization Technology Classification" that divides all EGs into five technical levels-high, medium-high, medium, medium-low, and low-according to the PRODY value.This method facilitates clearer analysis and international comparisonof renewable energy product technology.
Different classification criteria for PRODY values will have varying effects on the conclusions of the study, with each classification having limitations.The main classification methods of the previous literature are the "Experience Sorting Method" of Tang [19], the "Technical Fixed Classification" of Zhu et al. [20], and the "Optimal Segmentation Method" of Wei [6].Tang [19] classifies the PRODY values according to the author's experience, ensuring that the technology classifications are as normal as possible, and the classification results of different scholars may be different.Zhu et al. [20] ignore the fact that technology changes over time.Wei [6] sorts PRODY data and then determines the number of categories according to needs, which is also likely to cause people to subjectively change the technology differences between samples.The "Equilibrium Technology Method" proposed in this paper emphasizes objectivity and will avoid the classification results being limited and influenced by time change and human experience.
In summary, although the negotiation process under the WTO framework is slow, the consensus of countries or regions is that the liberalization of trade in EGs can improve the global environment.In the context of the growing demand for global EGs, measurement of and empirical research on the technical complexity of EGs is rare.Ma J. and Xu H. believe that the technical level and price of China's export EGs are generally low, but there is no detailed quantitative verification study [21,22].To this end, based on previous research, this paper uses the technical complexity index to empirically measure the dynamic changes of China's EGs export technology and compare it with major countries (or regions) such as the United States, Germany, the United Kingdom, Japan, and more.The objective of this paper is to discover the changes in the technological level of EGs exported by countries (or regions) around the world and the status of China's export EGs in the international industrial value chain.The EGs technical complexity classification in this study adopts the "Equalization Technology Classification" method, and EGs are defined using the 2012 APEC EGs list.

Methods
The export complexity method proposed by Hausmann et al. (2005) uses international trade data to replace hard-to-find global R&D data for various types of products.The basic assumption of this method is that the more technical the class of products that are being exported from high-income countries, the higher the technical complexity of the products.This method does not consider other factors such as trade friction and intervention.In the global manufacturing value chain, developed countries are generally in the process of high value-added value such as R&D design, brand, and key parts production, while developing countries are more involved in low value-added links such as raw material supply and assembly.The status of countries in the global value chain will be reflected in the technological structure of the products that they export.This method combines the per capita income of countries (or regions) with exports.The technological content of the export products of these countries (or regions) in the global value chain can be measured.The method used in this paper consists of three steps: calculating the technical complexity of various EGs, classifying the technical complexity of different EGs, and calculating the overall technical level of each country (or region).
(1) The equation for the technical complexity of EGs exports.
The PRODY k is the export technical complexity of the category k export EGs at the world level.The equation for PRODY k is The notations in Equation ( 1) and their meanings are as follows.
j the jth EGs exporting country (or region) k the category of exported EGs X j the total exports of all EGs in the country (or region) j x jk the export value of category k EGs of the country (or region) j Y j the per capita gross domestic product (GDP) of the country (or region) j PRODY k the technical complexity of the category k exported EGs at the world level (2) The principle of the "Equalization Technology Classification" method.
The basic principle of this method is to ensure that the PRODY value difference of adjacent technology grade products is equal, and there is no limit on the number of products owned by each grade.
First, the calculated PRODY values of n-type EGs are arranged from small to large into an ordered sample (t 1 , t 2 , t 3 , . . ., t n ), in which t 1 is the smallest and t n is the largest.
Secondly, it is assumed that the technical complexity of the EGsis divided into m grades, and the PRODY value difference of the adjacent technology grade products is D. The equation for D is Finally, the technical classification criteria for EGs are calculated.The standards for the 1, 2, 3, . . ., m levels of EGs are This method can determine the technology classification standards of all EGs in the world in a given period of time.According to this standard, it is possible to clearly know how many high technically complex EGs are exported by a country (or region).
(3) The calculation method of the overall technical levelof exported EGs (which we call EXPY).
Assume that the overall technical level of exported EGs in a country (or region) j is EXPY j , and its equation is The calculated EXPY values are mainly used to compare the overall technical level of exported EGs in countries (or regions).

Classification Data of the APEC EGs List
There is no uniform standard for the classification of EGs.Based on the product function and service industry perspective, this study divides 54 APEC EGs into five categories: environmentally friendly, pollution control and treatment, water purification, renewable energy, and environmental monitoring and analysis.The detailed classification and Harmonized Commodity Description and Coding System (HS) code description of APEC EGs are shown in Table 1.As can be seen from Table 1, the five categories of EGs contain a total of 54 HS 6-digit code subdivision products.The category of environmentally friendly products includes only the loaded bamboo multi-layer floor.There are 14 kinds of pollution control and treatment EGs, five kinds of water purification EGs, 16 kinds of renewable energy EGs, and 18 kinds of EGs for environmental monitoring and analysis.

Sample Selection and Data Source
This study selected the world's top 27 exporters (or regions) of EGs from 2007 to 2016, including Austria, Belgium, Brazil, Canada, China, China Hong Kong, Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, Japan, Malaysia, Mexico, Netherlands, South Korea, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand, the United Kingdom, the United States, and Vietnam (Table A1) [3].From 2007 to 2016, the cumulative export volume of EGs of the 27 countries (or regions) accounted for over 90% of the world's total, demonstrating strong representation.
The per capita GDP of each country (or region) is derived from the World Bank database and has been converted to purchasing power parity (PPP) or currency equilibrium between countries (Table A2) [23].The PPP in this article uses the "Constant 2011 International $" standard.
In order to ensure data consistency, the data in this paper is from the COMTRADE database, and the commodity codes use the HS2007 standard.
Table 2 makes evident the variances in the number of EGs in each of the five classifications.There are 24 kinds of medium technical complexity products, 14 kinds of medium-high complexity products, 10 kinds of medium-low technical complexity products, 5 kinds of high technical complexity products, and only 1 low technical complexity product.

Dynamic Distribution of the Technical Complexity of China's Exported EGs
According to the classification criteria in Table 2, the dynamic distribution of the technical complexity of China's exported EGs from 2007 to 2016 is calculated and listed in Table 3.
As can be seen from Table 3, (1) China's EGs exports are concentrated in medium-low technical complexity products, and the proportion of high technical complexity products exported is low.From 2007 to 2016, the average annual export volume of medium-low technical complexity EGs was as high as 76.80%.The average annual export volume of high technical complexity EGs is only 1.57%, and that of medium-high technical complexity EGs reaches 6.01%.Statistics show that China's main exported EGs are concentrated in 847989 (radioactive waste compactor), 901380 (coordinate measuring instrument), 854140 (solar battery), 850300 (wind power equipment parts), 840410 (boiler auxiliary equipment), 840290 (biomass boiler), 850490 (transformer), and 901380 (heliostat).Except for the 847989 and 901380 EGs, which are of medium technical complexity, the other six categories are of low-medium technical complexity EGs (Table 2).( 2) From the perspective of evolutionary trends, the export technology structure of China's EGs is constantly being optimized.The export proportion of China's medium-low technical complexity EGs fell from 79.63% in 2007 to 68.26% in 2016, a decrease of 14.28%.Correspondingly, the cumulative export share of medium-high and high technical complexity products increased from 7.41% in 2007 to 10.04% in 2016, an increase of 35.49%.The export proportion of medium technical complexity EGs also increased from 12.07% in 2007 to 19.32% in 2016, an increase of 60.07%.

Comparison of Export Technology Structures of EGs in Major Economies
This paper compares the technology structure of EGs exports of the world's top six EGs exporters (Table A1) in 2007 and 2016 (Table 4).
As can be seen from Table 4, (1) The EGs export structures in China and South Korea are similar, and the proportion of medium-low technical complexity EGs is the highest.Although the proportions of medium-low technical complexity products in the two countries in 2016 were significantly lower than those in 2007, they still maintained a level of about 68%.Comparing the proportion of medium-high and high technical complexity EGs, Singapore, the United States, Germany, and Japan in 2016 reached 58.6%, 44.44%, 30.77%, and 28.98%, respectively, far higher than the 10% level of China and South Korea.(2) The growth rate of high technical complexity EGs in Singapore and Japan is high, from 7.95% and 7.35% in 2007 to 18.81% and 11.48% in 2016, respectively.In contrast, the proportions of high technical complexity EGs exports in China and South Korea has been slow, with only about 2% in 2016.

The Overall Technical Level of China's EGs and Its International Comparison
This paper selects the top 10 countries (or regions) that export EGs and five APEC members with large export volumes of EGs from 2007 to 2016 for a comparative analysis of EXPY.The top 10 exporters of EGs (or regions) are China, Germany, the United States, Japan, South Korea, Singapore, Italy, China Hong Kong, the United Kingdom, and France (Table A1).The other five APEC exporters of important EGs are Mexico, Malaysia, Canada, Thailand, and Vietnam.The EGs EXPY of 15 countries (or regions) from 2007 to 2016 are shown in Table 5.
As can be seen from Table 5, (1) Singapore ranks first in exported EGs's per average annual EXPY value.This is primarily because of the high proportion of medium-high and high complexity EGs in its export product structure.The products with high technical complexity are mostly 902780 (Mass spectrometer) and 902790 (Physical and chemical analysis instrument parts); those with medium-high technical complexity are mostly 841199 (gas turbine parts), 847990 (humidifier and dehumidifier parts), and 854390 (detector parts).In addition, the average annual EXPY values of exported EGs in the United States, European Union countries, and Japan are also in leading positions.(2) From 2007 to 2016, the overall technology of China's exported EGs is at a medium-low technical complexity level, ranking only higher than South Korea and Vietnam.For China, there is still a big gap with the world's major exporters of EGs such as Germany, the United States, and Japan.
(3) The EXPY value of China's exported EGs increased from $28,438 in 2007 to $32,330 in 2016, indicating that the overall technical level of China's EGs is constantly improving.It is worth noting that, except for Vietnam and Malaysia, the EXPY of the remaining EGs exporting countries (or regions) from 2007 to 2016 showed an overall growth trend.The EXPY growth rate of EGs in China and South Korea is as high as 13.69% and 14.92%, respectively, which is much higher than other countries (or regions).This shows that the gap between the overall technical level of EGs in these two countries and advanced countries (or regions) is shrinking.In addition, the EXPY growth rate of EGs in Singapore, China Hong Kong, Canada, Germany, and Japan also reached 8.63%, 7.96%, 6.13%, 5.76%, and 5.74%, respectively.This demonstrates that the world's EGs exporting countries (or regions) are increasingly competitive in terms of technology.

Table 1 .
The classification and HS code description of APEC EGs.

Table 2 .
The technology structure distribution of the world's EGs.

Table 3 .
The dynamic distribution of the export technology structure of China's EGs.

Table 4 .
The technology structure of EGs exports of the world's top six EGs exporters in 2007 and 2016.

Table 5 .
The overall technical level of exported EGs of 15 countries (or regions) from 2007 to 2016.

Table A2 .
The GDP 1 per capita of major exporters based on PPP 2 from 2007 to 2016.

Table A3 .
The annual average of technical complexity for EGs from 2007 to 2016.
Note: The raw data of the calculation results are from the COMTRADE database.