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China's New Silk Road and China-EU Trade

Author

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  • Chu Ping Lo

    (Department of Agricultural Economics, National Taiwan University)

Abstract

This paper develops a simple model, wherein firms choose to pay a premium for timely delivered freight since consumers place more value on goods that arrive sooner than later, to estimate the impact of China's "New Silk Road" (NSR) initiative on trade between China and Europe. We argue that if China's NSR is sufficiently realized, many time-sensitive firms that currently use maritime transport might switch to ground transport as the latter shortens transit time sharply at reasonable costs, hereby enlarging the market demands. Consequently, NSR might, ceteris paribus, increase trade between China and Europe by an additional 8% to 32%.

Suggested Citation

  • Chu Ping Lo, 2018. "China's New Silk Road and China-EU Trade," Annals of Economics and Finance, Society for AEF, vol. 19(2), pages 683-701, November.
    • Handle: RePEc:cuf:journl:y:2018:v:19:i:2:lo
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    References listed on IDEAS

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    Cited by:

    1. Kundu, Tanmoy & Sheu, Jiuh-Biing, 2019. "Analyzing the effect of government subsidy on shippers’ mode switching behavior in the Belt and Road strategic context," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 129(C), pages 175-202.

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    More about this item

    Keywords

    One Belt One Road; New Silk Road; China; Europe;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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