The role of the One-Belt One-Road initiative in China's exports and global value chains

• Authors: Joanna Wolszczak-Derlacz , Yuxin Lu

Abstracts

EN

Research background: China is regarded as the ?world factor? highly involved in international trade and plays an increasingly important role in the global value chains (GVC). Additionally, the ?One-Belt One-Road? (OBOR) initiative was proposed by the Chinese government to further promote China in the international market. Purpose of the article: The article explores the role of the OBOR in China?s exports and global value chain.  It aims at: 1) verifying how OBOR impacts the volume of China's export and value-added export to its partners. 2) checking whether or not OBOR strengthens the industrial connection between China and its participants at the GVC level. 3) examining the different roles of corridors in China's exports and GVC. Methods: The empirical analysis is based on the augmented gravity model of international trade, which comprises China and its 197 partners in the period 2000?2018. The model is estimated for gross export as well GVC measured by domestic value added in export and the value contributed by a partner to China?s exports. Findings & value added: In general, there is a significant positive correlation between OBOR and the volumes of China?s export, domestic value-added trade and the value of partner?s contributed in China?s export. However, some of the results are blurred by OLS and FE methods. The author points out that FE-PPML estimation methods are more adequate. Among the six economic corridors, Bangladesh-China-India-Myanmar (BCIM), China-Pakistan (CP) and China Indochina Peninsula (CIP) were proven to play a prominent role in promoting China?s export, DVA and strengthening the links of global value chains. It is worth noting that the China-Mongolia-Russian Federation (CMRF) corridor harms China's export and DVA trade, and at the same time promotes countries in its region that benefit from trade with China.

Keywords

EN

One-Belt One-Road; China; gravity trade models; global value chains

• Publisher: Instytut Badań Gospodarczych
• Journal: Equilibrium. Quarterly Journal of Economics and Economic Policy
• Year: 2022
• Volume: 17
• Issue: 2
• Pages: 317-341

Dates

published

2022

Contributors

author

Joanna Wolszczak-Derlacz

• Gdańsk University of Technology

• https://orcid.org/0000000233925267

author

Yuxin Lu

• Gdańsk University of Technology

• https://orcid.org/0000000264669374

References

• Abbas, G., Liu, Z., Wasti, S., Munir, U., & Abbas, M. (2019). CPEC?s utility and concerns under OBOR initiative: a Pakistani industrial perspective. Economies, 7(3), 90. doi: 10.3390/economies7030090.
• Anderson, J. E. (1979). A theoretical foundation for the gravity equation. Ameri-can Economic Review, 69(1),106?116.
• Anderson, J., & van Wincoop, E. (2003). Gravity with gravitas: a solution to the border puzzle. American Economic Review, 93(1), 170?192. doi: 10.1257/0002 82803321455214.
• Bacchetta, M., Beverelli, C., Cadot, O., Fugazza, M., Grether, J., & Helble, M. (2012). A practical guide to trade policy analysis. Gene?ve: World Trade Or-ganization, 103?120.
• Borchert, I., Larch,M., Shikher, S., & Yotov, Y. (2020). Disaggregated gravity: benchmark estimates and stylized facts from a new database. School of Eco-nomics Working Paper Series, LeBow College of Business, Drexel Universityx, 2020-8.
• Cieślik, A., Michałek, J., & Szczygielski, K. (2019). What matters for firms? participation in global value chains in central and east European countries? Equilibrium. Quarterly Journal of Economics and Economic Policy, 14(3), 481?502. doi: 10.24136/eq.2019.023.
• Correia, S., Guimar?es, P., & Zylkin, T. (2020). Fast Poisson estimation with high-dimensional fixed effects. Stata Journal: Promoting Communications on Statistics And Stata, 20(1), 95?115. doi: 10.1177/1536867x20909691.
• Du, J., & Zhang, Y. (2018). Does one belt one road initiative promote Chinese overseas direct investment? China Economic Review, 47, 189?205. doi: 10.101 6/j.chieco.2017.05.010.
• Feenstra, R. (2015). Advanced international trade: theory and evidence. Princeton University Press.
• Foo, N., Lean, H., & Salim, R. (2020). The impact of China?s one belt one road initiative on international trade in the ASEAN region. North American Journal of Economics And Finance, 54, 101089. doi: 10.1016/j.najef.2019.101089.
• Gereffi, G., Humphrey, J., Kaplinsky, R., & Sturgeon*, T. (2001). Introduction: globalisation, value chains and development. IDS Bulletin, 32(3), 1?8. doi: 10.1111/j.1759-5436.2001.mp32003001.x.
• Gereffi, G., & Korzeniewicz, M. (1994). Commodity chains and global capital-ism. Westport, Connecticut: Praeger.
• Ge, Y., Dollar, D., & Yu, X. (2020). Institutions and participation in global value chains: evidence from belt and road initiative. China Economic Review, 61, 101447. doi: 10.1016/j.chieco.2020.101447.
• Guo, X., Zhang, J., Xue, J., & Yan, T. (2017). A research on the gravity model of China?s oil trade in the strategic context of one belt one road. Journal of Economics and International Finance, 9(10), 95?102. doi: 10.5897/jeif2017.08 58.
• Head, K., & Mayer, T. (2014). Gravity equations: workhorse, toolkit, and cook-book. In G. Gopinath, E. Helpman & K. Rogoff (Eds.). Handbook of interna-tional economics. Elsevier, 131?195. doi: 10.1016/b978-0-444-54314-1.00003-3.
• Heuser, C., & Mattoo, A. (2017). Services trade and global value chains. Policy Research Working Paper, 8126. doi: 10.1596/1813-9450-8126.
• Huang, Y. (2016). Understanding China's belt & road initiative: motivation, framework and assessment. China Economic Review, 40, 314?321. doi: 10.101 6/j.chieco.2016.07.007.
• Kohl, T. (2019). The belt and road initiative?s effect on supply-chain trade: evi-dence from structural gravity equations. Cambridge Journal of Regions, Economy and Society, 12(1), 77?104. doi: 10.1093/cjres/rsy036.
• Kordalska, A., & Olczyk, M. (2021). New patterns in the position of CEE coun-tries in global value chains: functional specialisation approach. Oeconomia Copernicana, 12(1), 35?52. doi: 10.24136/oc.2021.002.
• Liu, A., Lu, C., & Wang, Z. (2020). The roles of cultural and institutional distance in international trade: evidence from China's trade with the belt and road countries. China Economic Review, 61, 101234. doi: 10.1016/j.chieco.2018.10.001.
• Li, W., & Jin, D. (2018). On the design of financial products along OBOR. Jour-nal of Finance and Data Science, 4(2), 55?70. doi: 10.1016/j.jfds.2017.10.001.
• Ma, J., Balezentis, T., Zhao, Z., & Fang, C. (2017). One belt one road (OBOR) initiative in central Asia: the study of OBOR on China and Central Asia agri-cultural trade. Transformations in Business & Economics, 16(3(42)), 41?55.
• Nikulin, D., Wolszczak-Derlacz, J., & Parteka, A. (2021). GVC and wage disper-sion. Firm-level evidence from employee?employer database. Equilibrium. Quarterly Journal of Economics and Economic Policy, 16(2), 357?375. doi: 10.24136/eq.2021.013.
• OECD (2018). The belt and road initiative in the global trade, investment and finance landscape. In OECD Business and Finance Outlook 2018. Dordrecht: OECD Publishing, Paris, 9?12. doi: 10.1787/9789264298828-en.
• Olivero, M., & Yotov, Y. (2012). Dynamic gravity: endogenous country size and asset accumulation. Canadian Journal Of Economics/Revue Canadienne D'économique, 45(1), 64?92. doi: 10.1111/j.1540-5982.2011.01687.x.
• Roberts, B. (2004). A gravity study of the proposed China-Asean free trade ar-ea. International Trade Journal, 18(4), 335?353. doi: 10.1080/0885390049051 8208.
• Sauvant, K., & Chen, V. (2014). China?s regulatory framework for outward for-eign direct investment. China Economic Journal, 7(1), 141?163. doi: 10.1080/175 38963.2013.874072.
• Sheng, Y., Tang, H., & Xu, X. (2014). The impact of the ACFTA on ASEAN?PRC trade: estimates based on an extended gravity model for component trade. Applied Economics, 46(19), 2251?2263. doi: 10.1080/00036846.2014.89 9676.
• Shepherd, B. (2016). The gravity model of international trade: a user guide (an updated version). United Nations ESCAP, 17?30.
• Silva, J., & Tenreyro, S. (2006). The log of gravity. Review of Economics and Statistics, 88(4), 641?658. doi: 10.1162/rest.88.4.641.
• Tinbergen, J. (1962). Shaping the world economy; suggestions for an internation-al economic policy. New York: Twentieth Century Fund.
• Wang, Z., Wei, S., & Zhu, K. (2013). Quantifying international production shar-ing at the bilateral and sector levels. NBER Working Paper, 19677. doi: 10.3386 /w19677.
• Wen, X., Ma, H., Choi, T., & Sheu, J. (2019). Impacts of the belt and road initia-tive on the China-Europe trading route selections. Transportation Research Part E: Logistics And Transportation Review, 122, 581?604. doi: 10.1016/j.tr e.2019.01.006.
• Yang, G., Huang, X., Huang, J., & Chen, H. (2020). Assessment of the effects of infrastructure investment under the belt and road initiative. China Economic Review, 60, 101418. doi: 10.1016/j.chieco.2020.101418.
• Yang, S., & Martinez-Zarzoso, I. (2014). A panel data analysis of trade creation and trade diversion effects: the case of ASEAN?China free trade area. China Economic Review, 29, 138?151. doi: 10.1016/j.chieco.2014.04.002.
• Yotov, Y., Piermartini, R., Monteiro, J., & Larch, M. (2016). An advanced guide to trade policy analysis: the structural gravity model. Geneva/New York: WTO, 9?54. doi: 10.30875/abc0167e-en.
• Yu, C., Zhang, R., An, L., & Yu, Z. (2020). Has China?s belt and road initiative intensified bilateral trade links between China and the involved coun-tries? Sustainability, 12(17), 6747. doi: 10.3390/su12176747.
• Yu, L., Zhao, D., Niu, H., & Lu, F. (2020). Does the belt and road initiative ex-pand China's export potential to countries along the belt and road? China Eco-nomic Review, 60, 101419. doi: 10.1016/j.chieco.2020.101419.
• Zhai, F. (2018). China?s belt and road initiative: a preliminary quantitative as-sessment. Journal of Asian Economics, 55, 84?92. doi: 10.1016/j.asieco.20 17.12.006.
• Zhang, Y., & Wang, S. (2015). Trade potential of China?s export to ASEAN: the gravity model using new economic mass proxies. Journal of Systems Science and Information, 3(5), 411?420. doi: 10.1515/jssi-2015-0411.

Identifiers

DOI

10.24136/eq.2022.011

Biblioteka Nauki

22443165