Analysis of Chinese international trade potential under the background of the belt and road initiative

Abstract

The Belt and Road Initiative is a new globalization initiative to strengthen economic integration, which provides new opportunities for China's trade cooperation with countries along the Belt and Road. The research on the influencing factors of trade and the great potential of trade cooperation is of great practical significance for promoting the regional economic cooperation of the countries along the Belt and Road. Specifically, what is the potential for trade between China and the Belt and Road Initiative participating countries? What are the current influencing factors to the realization of trade potential? How significant is the impact? To this aim, this paper takes 80 countries which have signed the One Belt And One Road memorandum with China as the research object, collects the trade panel data of the decade from 2009 to 2018. Then empirically analyzes the trade influencing factors of the import and export trade between China and these countries by augmented gravity model. After that, the trade potential is further estimated. The results show that the GDP of the two countries, the size of their populations, telephone infrastructure, trade freedom, the quality of railroad infrastructure, and whether it borders China have an impact on both import and export. Level of government governance, investment freedom, air transportation and port infrastructure, whether it signs RTA with China has an impact on China's exports. RMB exchange rate, Internet communication infrastructure and geographical distance between the two countries only affect China's imports. Among the 80 markets along the route, 31 countries have great trade potential to be developed. More than half of these are Europe and Central Asia, sub-Saharan Africa and South Asia countries. Finally, based on the research results of this paper, policy enlightenment is obtained.