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“One Belt, One Road” Initiative to Stimulate Trade in China: A Counter-Factual Analysis

Author

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  • Shih-Chih Chen

    (Department of Information Management, National Kaohsiung University of Science and Technology, Kaohsiung 82444, Taiwan)

  • Jianing Hou

    (Business School, Hubei University, Wuhan 430062, China)

  • De Xiao

    (Business School, Hubei University, Wuhan 430062, China)

Abstract

This research implements the panel data control method to evaluate the stimulative effects of the “One Belt, One Road” initiative on trade performance in China. We constructed a counterfactual of China’s trade surplus by exploiting the unobservable common factors that create observable trade balances among other countries. We also modified the traditional control group selection by extending it to the Elastic-Net method. This study found the following: (i) China’s annual trade surplus increased sharply by 10.69% on average since 2015. In contrast, analysis of the counterfactual showed that the net exports of China would have remained constant without the stimulation of the “One Belt, One Road” initiative; (ii) These results are robust to exports growth rates and checking by various control group selections; (iii) Although the analysis shows return to an average trading balance, we should not underestimate the benefits of the initiative in the long run.

Suggested Citation

  • Shih-Chih Chen & Jianing Hou & De Xiao, 2018. "“One Belt, One Road” Initiative to Stimulate Trade in China: A Counter-Factual Analysis," Sustainability, MDPI, vol. 10(9), pages 1-13, September.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:9:p:3242-:d:169071
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    Cited by:

    1. Holger Görg & Haiou Mao, 2022. "Does the belt and road initiative stimulate Chinese exports? Evidence from micro data," The World Economy, Wiley Blackwell, vol. 45(7), pages 2084-2100, July.
    2. Koffi Dumor & Li Yao, 2019. "Estimating China’s Trade with Its Partner Countries within the Belt and Road Initiative Using Neural Network Analysis," Sustainability, MDPI, vol. 11(5), pages 1-22, March.
    3. Görg, Holger & Mao, Haiou, 2020. "Does the belt and road initiative stimulate chinese exports? The role of state-owned enterprises," KCG Working Papers 21, Kiel Centre for Globalization (KCG).
    4. Ge, Ying & Dollar, David & Yu, Xinding, 2020. "Institutions and participation in global value chains: Evidence from belt and road initiative," China Economic Review, Elsevier, vol. 61(C).
    5. Chunjiao Yu & Ren Zhang & Lian An & Zhixing Yu, 2020. "Has China’s Belt and Road Initiative Intensified Bilateral Trade Links between China and the Involved Countries?," Sustainability, MDPI, vol. 12(17), pages 1-19, August.
    6. Toriqul Bashar & Ivan W. H. Fung & Lara Celine Jaillon & Di Wang, 2021. "Major Obstacles to Public-Private Partnership (PPP)-Financed Infrastructure Development in China," Sustainability, MDPI, vol. 13(12), pages 1-14, June.
    7. Jianing Hou & Shih-Chih Chen & De Xiao, 2018. "Measuring the Benefits of the “One Belt, One Road” Initiative for Manufacturing Industries in China," Sustainability, MDPI, vol. 10(12), pages 1-16, December.

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