Abstract: When accounting for the growth of carbon dioxide, international fragmentation needs to be taken into account. Different from previous studies, which focus on the industry effect, it is proposed to investigate the issue from the perspective of product-cause, i.e. the changes due to the production of certain final goods (either for domestic consumption or for export). By adapting the latest available input-output (IO) data taking into account the processing trade, and by utilizing modified structural decomposition analysis (SDA) model, this paper studies the causes of China's CO₂ emissions growth so as to provide industrial policy suggestions. It is found that, the substantial reduction of coefficients of emissions helped to release environmental pressure, yet the change of technical coefficients, the rapid growth of final uses and export worsened the situation. To enhance the capacity of reducing the emission intensity, new technology such as the so-called "green building" should be promoted.

Key words: international fragmentation, input-output table, structural decomposition analysis (SDA), coefficients of emissions intensity, industry policy