China's outward foreign direct investment in the Belt and Road Initiative: What are the motives for Chinese firms to invest?

Because of the potentially large and important effects of the extremely ambitious Belt and Road Initiative (BRI) launched by China in late 2013, considerable attention has been given to the motives for, and repercussions of, the BRI-driven infrastructural projects. Yet, the non-infrastructural outward foreign direct investment (FDI) from China to BRI countries, which varies quite substantially across different sectors and different countries, has not yet received much attention. In contrast to some recent studies showing that the massive initiative has increased China's total FDI outflows to fellow BRI countries, in this paper, based on our sector-level difference-in-differences models, we find that effect to be statistically insignificant. Yet, at the same time, we provide empirical evidence on the sectoral pattern of China's outward FDI before and after 2014 indicating that China's FDI outflows to BRI countries have significantly increased in sectors characterized by overcapacity and contributing to pollution in China, thereby demonstrating that China's BRI-driven outward FDI has been very selective in terms of sectors. We confirm these findings with a variety of robustness checks and show that it is BRI countries with relatively low institutional quality that have been more likely to receive these types of FDI from China. We thus speculate that Chinese firms have been motivated to place FDI investments in BRI countries for the sake of alleviating China's own overcapacity and pollution problems. Our findings lead us to suggest that, although these sectoral patterns are consistent with the different stages of economic development in which China and its fellow BRI-identified countries find themselves, Chinese investors and host country governments should be more concerned with the potential for unwanted side-effects of the FDI investments so that the mutually beneficial effects of the BRI can be sustained into the indefinite future among all countries involved.     

The roles of cultural and institutional distance in international trade: Evidence from China's trade with the Belt and Road countries

Cultural distance and institutional distance have been playing increasingly significant roles in international trade. Recently, the Belt and Road Initiative (BRI) proposed by China has drawn worldwide attention. This paper examines the roles of cultural distance and institutional distance in China's trade relationship with the Belt and Road (B&R) countries. We estimate the extended gravity model using bilateral trade data at product-level during 2002–2016 between China and 99 trading partners, 38 of which are along the Belt and Road. Using Poisson generalized estimating equations (GEE) econometric methods, we find that firstly, cultural distance and institutional distance inhibit China's bilateral trade with the Belt and Road countries. Secondly, China's bilateral trade with the B&R countries is more sensitive to the change of cultural distance than institutional distance by comparing their beta coefficients. Thirdly, compared to Asian countries on the Belt and Road, bilateral trade flows between China and European countries show less sensitivity to changes in cultural distance, except China's imports from its trading partners. While the trade effects of institutional distance show no difference between China's trade with European countries and Asian countries. Lastly, the announcement of BRI does reduce trade-inhibiting effect of cultural distance on China's trade with the Belt and Road countries, while increase China's exports sensitivity to institutional distance. This study finally suggests relevant cultural exchange driven by the BRI eventually assisting unimpeded trade and deepening the cooperation.     

The Renminbi as a Trading Currency: Evidence from Selected Countries Participating in the Belt and Road Initiative

This paper investigates the effects of the renminbi (RMB) exchange rate on trade prices and volumes in selected Belt and Road Initiative (BRI) countries in comparison with the effects of the US dollar. The stylized facts show that the RMB is underused in bilateral trade with selected BRI countries where intermediate goods dominate. By estimating the level of exchange rate pass‐through and trade volume elasticity, we find that the RMB is significantly correlated with the volume of imports in the sample countries, predicted by the producer currency pricing (PCP) paradigm. We also regroup intermediate and final goods between China and the BRI countries. The evidence shows that dollar fluctuation affects export volumes, reflecting the role of the US as a final goods destination, whereas the RMB exerts a significant impact on the volume of intermediate goods imported from China to the sample countries due to China's important position in global value chains.     

Belt and road: The China dream?

This paper explores the impact of the Belt and Road Initiative (BRI), in terms of changes in trade costs on trade and consumer welfare in China, the EU, and the rest of the World. We employ a general equilibrium structural gravity approach and conduct a counterfactual analysis. Our key findings are as follows: (i) China and the EU are expected to make substantial gains from the BRI due to reductions in transport costs; (ii) signing and implementing a deep FTA between China and the EU is equivalent to transport cost reductions of 15–20%; (iii) the joint policy of the BRI and FTA is super-additive, magnifying the gains from the separate policies; and (iv) where transport cost reductions are 20% or more, the potential negative effect of the China-US trade war on China is more than compensated for by the BRI initiative. Our results provide evidence that the BRI has the potential to deliver significant welfare gains, particularly if combined with other trade integration schemes, and to counterbalance aggressive trade policies.     

European versus American Perspectives on the Belt and Road Initiative

China has started to deploy its Belt and Road Initiative (BRI) in the European Union (EU), and the EU in turn has regional and global interests that intersect with the BRI's scope. Subject to future adjustments of China's BRI strategy, the initiative's potential contribution to the EU requirements for infrastructure development could be significant, even though its modalities in the EU are inevitably different from those in countries that are poorer or have more difficult financial market access. The EU's attitude to the BRI, however, has not yet fully coalesced. Despite superficial similarities in public discourses, the EU has a profoundly distinct perspective from that of the US on the BRI, and more generally on the rise of China and its growing global influence. For the EU, the BRI generates challenges but also potential benefits. The EU should improve its ability to welcome sensible BRI projects, including through the adoption of greater reform of screening frameworks for foreign direct investment. More generally, the EU should enhance its ability to define policies independent of the US on China and the challenges resulting from China's rise. China should also make further efforts to foster a constructive relationship with the EU.     

China's Belt and Road Initiative: Can Europe Expect Trade Gains?

The Belt and Road Initiative (BRI) aims to improve cross‐border infrastructure to reduce transportation costs across a massive geographical area between China and Europe. We estimate how much trade might be created among Belt and Road (B&R) countries as a consequence of the reduction in transportation costs (both railway and maritime) and find that European Union countries, especially landlocked countries, will benefit considerably. This is also true for Eastern Europe and Central Asia and, to a lesser extent, South‐East Asia. In contrast, if China were to seek to establish a free trade area within the B&R region, EU member states would benefit less, while Asia would benefit more. Xi Jinping's current vision for the B&R, centered on improving transport infrastructure, is advantageous for Europe as far as trade creation is concerned.     

Chinese OFDI responses to the B&R initiative: Evidence from a quasi-natural experiment

Based on an exogenous quasi-natural experiment, combined with administrative data from International Trade Statistics and the China Global Investment Tracker database, this study uses a difference-in-differences approach to examine whether the Belt and Road Initiative (BRI) can help alleviate the negative effect of political risks in host countries on Chinese outward foreign direct investment (OFDI). The empirical findings are as follows. a) When controlling for firm-level and country-level variables and various fixed effects, high-level international political cooperation under the BRI can considerably increase Chinese OFDI. b) Political risks in host countries significantly reduce Chinese investment and increase losses, and the BRI mainly stimulates investment through mechanisms that seek to reduce policy uncertainty and political risks in host countries for Chinese firms. c) By further considering the gain (or loss) status of Chinese investment projects, the study shows that the BRI has a limited role in reducing investment losses. The study also performs a series of robustness tests to eliminate the influence of firm heterogeneity, informal political interference, and random effects. The overall results are consistent with those of the quasi-experiment.     

Foreign trade and innovation sustainability: Evidence from China

By using data on firms listed on Chinese A-share markets from 2011 to 2017, this study analyzes whether the implementation of China’s the Belt and Road Initiative (BRI) affects the sustainable innovation ability of firms. To address endogeneity concerns, we construct a quasi-natural experiment that focuses on firms with overseas business relationships, which had further expanded its foreign trade scale due to the BRI policy in 2014 to explore the casual relation between foreign trade and firm innovation sustainability. Baseline results indicate that the sustainable innovation ability of firms has improved significantly since the promulgation of the BRI policy in 2014. In addition, we find that the improvement of sustainable innovation ability is caused by the “going-out” effect, rather than the “bringing-in” effect, which is the result of the BRI policy. Results suggest that free trade has been conductive to promoting firm sustainable innovation ability, which is also confirmed in additional robustness and placebo tests.     

中国-东盟FTA贸易效应实证研究

中国-东盟自由贸易区(CAFTA)的成立对中国和东盟国家具有重要的经济与政治意义。本文利用一个扩展后的引力模型对CAFTA的贸易效应进行了实证分析。结果显示:CAFTA对区内贸易具有显著扩大效应的同时也显著地促进了与非成员之间的贸易;CAFTA符合"自然的贸易伙伴"的事前贸易关系紧密和空间距离接近标准;同时,CAFTA成员间产品出口结构以互补性为主;进一步降低成员间贸易壁垒、加强贸易合作对CAFTA成员间和世界贸易的扩大具有积极意义。     

Economic and environmental performance of the belt and road countries under convex and nonconvex production technologies

The Belt and Road Initiative (BRI) is expected to boost the economic and technological cooperation among the participating countries. In this paper, we argue that the economic and environmental efficiency can be used as measures identifying the best practice in the BRI. However, the results of the analysis may be affected by perturbations in the data and outlying observations. The outliers may lead to biased policy implications. Unlike previous research, this paper compares economic and environmental performance in developing countries using both convex and nonconvex production technologies based on a nonparametric framework. Specifically, this paper extends the by-production model with nonconvex technology. The model allows reducing the impact of extreme production plans (e.g., small or large countries). The resampling approach is applied for the by-production framework. The research covers 61 countries along the Belt and Road during 2000−2017. Our results indicate that the influence of outliers is more significant for convex technology than nonconvex technology. The use of the robust approach is particularly important when a convex technology is assumed. The proposed approach also allowed identifying BRI countries that are significantly over- or underperforming in either economic or environmental efficiency.     

中国与东盟利用外资的对比分析

中国和东盟各国都是吸引外国直接投资的主要地区。由于属于大致相同的经济发展水平,在资源禀赋、产业结构和贸易结构等方面均有相似之处,因此在吸引外资以求发展本国经济方面,中国和东盟存在着互补和竞争的关系。     

Impact of trade cost on China-EU agri-food trade

In this research, we investigate trade costs in relation to China-EU trade in agri-food products during 2001–2015. Major components of trade cost include transportation costs, border-related policy barriers such as tariffs, and local distribution costs. Our results indicate that trade costs between China and EU involving agri-food products, although falling, remain abnormally high. Consequently, we find that trade cost reductions contribute to over half of the overall China-EU trade growth. Our decomposition technique demonstrates that economic growth and trade cost reductions are the key drivers of China-EU trade expansion. Implementation of the Belt and Road Initiative (BRI) would reduce high trade costs to increase EU-China bilateral agricultural trade significantly. This is not fully captured in the gravity models where a static distance is usually used as a proxy to trade cost. The BRI will not reduce the distance, but it will cut transportation and other components of trade cost for China-EU trade.     

Platforms in the Pacific: the trade effects of direct investment in Thailand

Thailand, as other ASEAN countries, experienced a dramatic surge of inward foreign direct investment in the late 1980s. These investments took place in relatively advanced, export-oriented industries. This study examines the effects of these investments on Thailand's trade, using a new methodology based on international input-output analysis. This framework accounts for the direct trade of foreign-affiliated companies as well as their indirect trade effects, including the displacement of competing imports, on one hand, and the procurement of imported intermediate inputs and capital goods, on the other. The framework is implemented with data from a Japanese Chamber of Commerce (Bangkok) survey. The results show, among other things, that Japanese-affiliated firms tend to offset their large direct trade deficits in the longer run with substantial indirect trade surpluses. These firms do, however, contribute to “triangular trade”-that is, Thai trade deficits with Japan, and surpluses with other countries.     

国外对华反倾销的经济与政治动因

中国是世界上遭遇反倾销诉讼最多的国家,以反倾销为手段的贸易保护已经成为制约中国对外贸易可持续发展的巨大障碍。本文重点分析对华反倾销的成因,探究进口国宏观经济和政治因素对反倾销行为的影响。研究发现:各国对华反倾销立案的宏观经济与政治动因存在显著的差异性。本文揭示了各国对华反倾销立案的内在动因,得出了具有价值的比较研究结论。     

Reorganization of Intra‐ASEAN 5 Trade Flows: The ‘China Factor’*

There are claims that China's influence on ASEAN is direct in that she has encouraged more exports to flow into her huge markets and changed trade flows among member countries. Demand and supply are thus deemed to have become more China‐centered. This study therefore explores the plausibility of China as a ‘factor’ that influences bilateral intra‐ASEAN 5 trade flows through demand (exporting country) and supply (importing country). The results imply that China's integration in the region increases the size of the key ASEAN member economies export market. There is also no indication that import sourcing from China by ASEAN 5 countries reduces export expansion within the latter. The results accord with the fact that although China has become an important export destination and an import source for individual ASEAN 5 countries, this has not reduced intra‐ASEAN 5 trade.     

Role of China in the development of trade and FDI cooperation with BRICS countries

BRICS countries (Brazil, Russia, India, China, South Africa) over the next 50 years could become the driving force in the world economy. They have the huge joint potential and wide opportunities. Further growth of their economies requires creation of their closer partnership in trade and investments. China is playing the leading role in this process, as a main investor and importer of FDI (foreign direct investment) and trade partner in BRICS group. Trade and investment cooperation of BRICS countries is a new paradigm of the formation of their economic growth. This problem is important, but still insufficiently studied and not enough reflected in the economic researches. For the first time, author developed and tested the methodology of the determining the Intra-BRICS potential of trade and investment cooperation and getting the synergistic effect of the economic interaction of BRICS countries. Trade and investment cooperation of China with other BRICS countries exerts very strong impact on the development of their economies. China continue to deepen its economic ties with other BRICS countries and open up its financial market to serve as a cushion against rising global uncertainty. Development of Intra-BRICS trade and investment cooperation is very important in the context of trade war imposed by the USA against China.     

中日韩文化创意产品贸易竞争关系的实证分析

中日韩三国在内部市场和国际市场上的创意产品贸易竞争性较强,这对于扩大中国创意产品出口有借鉴意义。     

The dynamics of international competitiveness

The Dynamics of International Competitiveness. — This paper focuses on the determinants of international competitiveness over the seventies and eighties. The theoretical framework adopted here is based on a “technology-gap” account of trade flows. The econometric analysis relies on a dynamic model estimated by pooling time-series across countries. The short- and long-term impacts of both technical change and labour costs on trade performance are investigated. It is found that technological variables (patents and investments) play a major role in shaping dynamics of exportshares, while labour costs asymmetries among countries appear to affect trade performance only in the short term.     

上合组织自贸区经济效应的前瞻性研究--基于GTAP模型的模拟

文章在分析中国同上海合作组织成员国贸易现状的基础上,运用GTAP模型实证研究了建立上合组织自贸区可能带来的经济影响。研究发现建立自贸区虽然在短期内可能存在一定的困难和冲突,但是符合各成员国的长远利益。具体结论如下:从短期来看,大部分成员国贸易放大效应较为明显;各成员国会扩大对比较优势产品的出口,增加对比较劣势产品的进口;各成员国贸易条件和福利水平变化不一,一些小国和落后国家贸易条件恶化,福利水平下降。从长期来看,自贸区的建立能有效拉动各成员国经济增长;随着区域内分工纵深发展,各国产业结构均出现调整。总体来说,完全自由贸易情形下的经济效应要大于设置关税减让例外情形。     

中日韩服务贸易竞争力分析及对我国的启示

本文分析了中国、日本和韩国的服务贸易的发展状况,对三国的整体服务贸易及行业服务贸易国际竞争力进行了比较研究。结果表明,中日韩三国服务贸易整体均不具备比较优势,各行业服务贸易竞争力有所差异。最后就我国如何由服务贸易大国转变为服务贸易强国提出了提升我国服务贸易竞争力的相应策略。