Abstract
This paper develops a multi-sector and multi-factor structural gravity model that allows an analytical and quantitative decomposition of the emission and output changes into composition and technique effects. We find that the negative production shock of China's containment policy propagates globally via supply chains, with the carbon-intensive sectors experiencing the greatest carbon emission shocks. We further reveal that China's current stimulus package in 2021-2025 is consistent with China's emission intensity-reduction goals for 2025, but further efforts are required to meet China's carbon emissions-peaking target in 2030 and Cancun 2°C goal. Short-term changes in carbon emissions resulting from lockdowns and initial fiscal stimuli in "economic rescue" period have minor long-term effects, whereas the transitional direction of future fiscal stimulus exerts more predominant impact on long-term carbon emissions. The efficiency improvement effects are more important than the sectoral structure effects of the fiscal stimulus in achieving greener economic growth.