China's Trade‐Off Between Economic Benefits and Sulfur Dioxide Emissions in Changing Global Trade

China has been suffering from air quality degradation since its ascension into the World Trade Organization in 2001. The unequal exchange that occurs with international trade—that is, developed countries obtaining larger shares of trade‐related value added relative to the shares of trade‐related air pollution incurred locally—may obstruct the greening of global supply chains. In this study, we conduct a multi‐regional input‐output analysis to examine the change in the distribution of economic benefits and sulfur dioxide emissions underlying China's international trade from 2002 to 2015. The results show that both net trade‐related economic benefits and SO2 emissions in China rapidly increased from 2002 to 2007 and then decelerated after 2007 due to changes in China's green development strategy. In the past 13 years, China has suffered from economic‐environmental inequality due to trade with most developed countries, for example, the United States, the European Union, East Asia, and Canada. East Asia, particularly Japan and South Korea, became both an economic and environmental winner while trading with China in 2015. China has also outsourced emissions to less developed regions, such as Sub‐Saharan Africa. We propose policy implications to further reduce the economic‐environmental inequality underlying China's international trade. Plain Language Summary China's ascension into the World Trade Organization has boosted its economy at a price of serious air pollution rendering the country as the largest emitter in the past decades. As China has become a pivotal trading partner of major economies, examining how its economic benefits and air pollution embedded in international trading have been changing provides key knowledge for decision makers to develop fair, environmentally friendly trading policies. By exploring this issue during 2002–2015, we found that rich countries obtained much larger shares of value added compared to the shares of air pollutant (e.g., SO2) emissions related to commodities and services consumed in China. Similarly, the undeveloped regions (i.e., Sub‐Saharan Africa) are burdening more pollution while gaining a smaller proportion of economic benefits through trading with China. Such change necessitates the ever‐increasing cross‐boundary collaborations and technology transfers between China and its main trade partners to achieve fair and sustainable trade. Key Points We traced China's economic gains and SO2 emissions embodied in global tr