Dynamic Relationship between Economic Growth, Foreign Trade and Carbon Emissions Based on the VECM Model

Abstract

Under the dual background of China's “dual carbon” goals and the high-quality development of foreign trade, the dynamic relationship among economic growth, foreign trade, and carbon emissions has become an important research issue. Based on annual national time-series data from 2000 to 2024, this paper incorporates foreign trade into the analytical framework of economic growth and carbon emissions, and comprehensively adopts unit root tests, Johansen cointegration analysis, vector error correction models, Granger causality tests, impulse response functions, and variance decomposition methods to empirically examine the long-term equilibrium relationship, short-term fluctuation characteristics, and dynamic transmission mechanism among the three variables. The study finds that foreign trade, economic growth, and carbon emissions are all first-order integrated sequences, and that there is a unique and stable long-term cointegrating relationship among the variables. Overall, trade and economic growth are the one-way driving factors of carbon emission changes, and there is no reverse transmission effect. Among them, the effect of foreign trade on carbon emissions shows obvious lag and phased structural characteristics: there is a short-term emission-reduction buffer effect, but in the medium and long term it significantly increases carbon emissions. Based on the empirical findings, this paper proposes that China should continue to optimize the structure of goods trade, expand the share of low-carbon service trade, improve the green trade institutional system, increase investment in low-carbon technology research and application, and encourage export industries to decouple economic growth from carbon emissions. This will help maintain a stable foreign trade base and steady economic operation while steadily advancing green and low-carbon transformation, achieving coordinated progress among foreign trade, economic development, and ecological protection.