Introduction

In January 2026, the EU's Carbon Border Adjustment Mechanism (CBAM) officially began collecting carbon border fees on imported products. This means that for Chinese companies exporting steel, aluminum, cement, fertilizers, and other products to the EU, "carbon compliance" is no longer an option on the planning board — it's a reality already in front of them.

According to UNCTAD's 2026 Global Trade Trends report, CBAM was listed as one of the top ten trends reshaping global trade in 2026. The World Economic Forum's April 2026 panel discussion also noted that CBAM's impact is moving from "geopolitical talk" to "corporate compliance practice."

What Is CBAM?

CBAM (Carbon Border Adjustment Mechanism) is a policy tool introduced by the EU to calculate the carbon emission costs of imported products and require importers to purchase corresponding CBAM certificates.

Core Mechanism:

- Importers must declare the embedded carbon emissions of their imported products

- Purchase CBAM certificates based on the weekly average price of EU ETS (EU Emissions Trading System) allowances

- If carbon costs have already been paid in the country of origin, a deduction can be claimed

Timeline:

- October 2023 — December 2025: Transition period (declaration only, no payment)

- January 2026 — Present: Formal collection period

Which Industries Are Most Affected?

CBAM currently covers five major industries:

IndustryImpact Level on Chinese Exports SteelHigh — China is the world's largest steel exporter, with significant export volume to the EU AluminumHigh — Aluminum smelting is a carbon-intensive process CementMedium — China's cement exports to the EU are limited, but the carbon emission coefficient affects a wide range FertilizerMedium — Involves carbon-intensive products like nitrogen fertilizers ElectricityLow — EU-China electricity trade volume is minimal

According to Credendo's January 2026 analysis, CBAM's formal implementation is expected to have a structural impact on manufacturing supply chain costs, particularly in steel and aluminum.

The "Green Protectionism" Debate

CBAM's original intention is to prevent "carbon leakage" — where EU companies shift high-carbon production to regions with weaker environmental standards, thereby offsetting the EU's domestic emission reduction efforts.

However, CBAM has also sparked a range of discussions:

Proponents argue:

- Exporting countries without carbon pricing mechanisms will face incentives to establish domestic carbon pricing systems

- In the long run, this contributes to global carbon reduction goals

Critics counter:

- Eurasia Review points out that CBAM risks being used as a trade barrier — "Climate Leadership or Green Protectionism?" is a question worth watching

- World Bank and IMF research shows CBAM's economic impact on developing countries may be greater than on developed ones

- Caixin Global reports that China has raised concerns with the EU over CBAM, arguing it may disrupt normal trade order

The coexistence of these two perspectives shows that CBAM is not just a climate policy tool, but also a complex variable in international trade rules.

Response Paths for Chinese Exporters

Facing CBAM's formal implementation, enterprises are advised to pay attention to the following areas from a compliance management perspective:

1. Build Carbon Emissions Calculation Capability

CBAM requires importers to declare the embedded carbon emissions of products. Companies need to establish a carbon footprint tracking system from raw materials to finished goods — this is the foundation of compliance.

2. Understand Carbon Cost Deduction Mechanisms

If the home country already has a carbon pricing mechanism (such as China's national carbon market), paid carbon costs can be deducted in CBAM declarations. Familiarity with this mechanism's applicable rules can help reduce costs.

3. Track Regulatory Developments

CBAM's specific implementation rules are still being adjusted, including whether the product scope will expand (potentially to organic chemicals and hydrogen) and the fluctuation mechanism for certificate prices.

4. Evaluate Alternative Markets and Product Mix Adjustment

Beyond compliance measures, companies can also assess short-term market diversification strategies and long-term product carbon intensity optimization pathways.

Summary

The formal implementation of CBAM marks a new stage in the deep entanglement of global trade and climate policy. For Chinese exporters, this is both a short-term compliance pressure and a potential competitive watershed — companies that build carbon compliance capabilities early may gain a differentiated advantage in the EU market.

References

  1. UNCTAD (2026). 10 Trends Shaping Global Trade in 2026.
  2. Eurasia Review (2026). Europe's Carbon Border Tax: Climate Leadership Or Green Protectionism?
  3. Caixin Global (2026). China Threatens EU After Carbon Border Tax Takes Effect.
  4. Credendo (2026.01). CBAM Implementation Could Prove Disruptive for Manufacturing Sector.
  5. World Economic Forum (2026). The Impact of the EU's CBAM on Business and the Carbon-Pricing Landscape.

Some analysis is based on publicly available information and general industry knowledge. [Further verification needed for specific product category carbon emission coefficients and deduction rules.]