In its document, the European Commission explicitly stated that China accounts for more than 80 percent of global production capacity in the battery manufacturing and solar photovoltaic sectors; at the same time, the European wind power industry is facing cost pressures from low-priced imports from China. On April 27, China’s Ministry of Commerce responded by stating that the bill constitutes “serious institutional discrimination” and will undermine fair competition.

This report analyzes the European Union's Carbon Border Adjustment Mechanism (CBAM) as it transitions from its preparatory phase to full implementation, focusing on three critical policy areas with direct implications for Chinese exporters: the recognition of carbon prices paid in producing countries, the potential conditional acceptance of international carbon credits, and the technical alignment between CBAM and the EU ETS free allowance benchmarks. It combines systematic legal review of the CBAM Regulation and its implementing acts with practical policy assessment, drawing on official EU legislative documents, technical studies from the Joint Research Centre (JRC) and the European University Institute (EUI), and expert reports from Adelphi and the Climate Club. The research examines the regulatory texts, identifies remaining uncertainties, and derives forward-looking policy recommendations for Chinese authorities and enterprises.

This paper analyzes the long-term impact of the European Union's Carbon Border Adjustment Mechanism (CBAM) on China's steel industry, with a focus on quantifying the resulting cost burden and identifying the key drivers and mitigating factors. It employs a dynamic, process-level scenario-based model that links three steel production routes with their emission intensities, energy transition pathways, carbon pricing systems (EU ETS and China's national carbon market), and trade flows through 2050. The model integrates three sub-modules—inflation and exchange rates, CBAM certificate cost calculation, and China's steel low-carbon transformation—to simulate CBAM obligations across multiple scenarios, with sensitivity analyses examining the effects of EU ETS carbon prices, domestic carbon market inclusion, electricity decarbonization, and hydrogen utilization on total certificate costs.

The EU views the CBAM as a key institutional mechanism for preventing “carbon leakage” and balancing domestic and international carbon costs; however, following the implementation of specific rules, its impact on Chinese steel companies is no longer merely a macro-level risk but has gradually evolved into a practical challenge that must be quantified, accounted for, and addressed head-on.

The expansion of China’s carbon market is the inevitable result of the convergence of multiple national strategic objectives.

This report presents the CBAM-CST model, a quantitative tool developed to analyze the long-term interaction between the EU Carbon Border Adjustment Mechanism and China's steel industry decarbonization. The model integrates three modules—CBAM cost calculation, China's steel low-carbon transformation, and inflation/exchange rates—to simulate CBAM certificate costs across multiple scenarios through 2050. It identifies EU ETS carbon price and Chinese steel carbon intensity as the primary cost drivers, and examines how low-carbon technologies, electricity decarbonization, and hydrogen adoption can reduce the CBAM burden. The analysis also evaluates the potential offset from China's domestic carbon market and provides technical support for China-EU policy dialogue and enterprise strategy formulation.