A micro level empirical analysis of Chinese steel exporter responses to the expected carbon border adjustment mechanism

Against the backdrop of the imminent implementation of the EU Carbon Border Adjustment Mechanism (CBAM), China’s steel exports face significant external carbon cost shocks. As a core sector of heavy industry with high carbon emissions, the steel industry is a key link in advancing global sustainable development and achieving Sustainable Development Goal (SDG) 13 (Climate Action). Exploring the response of China’s steel exporters to anticipated carbon regulatory policies is therefore critical to understanding the practical pathways for low-carbon transition in high-emission manufacturing sectors under the framework of global sustainable development.This study adopts a micro-level approach, utilizing product-level data and employing a Difference-in-Differences (DID) method under a two-way fixed effects model alongside a dynamic event study within a DID framework. It identifies the responses of different steel products to policy shocks and potential transmission pathways. Results indicate that during the transition period, prices appear to serve as the primary channel for manifesting anticipated carbon costs; policy effects exhibit pronounced lagged impacts regardless of transmission route. This study provides insights into how China’s steel market responds to policy expectation signals, shedding light on the economic-level responses of high-emission manufacturing sectors to international green regulations in the context of sustainable development, and providing empirical evidence and policy insights for understanding how China’s manufacturing exports adapt to external climate policy shocks and for promoting the low-carbon transformation of the steel industry to align with global SDG 13 targets.