Geopolitical Risk Shocks and China's Foreign Trade: An Asymmetric Granger Causality Investigation

Escalating geopolitical conflicts and great power games have posed severe challenges to cross‐border trade and global economic stability. However, the literature inadequately addresses the nexus between geopolitical risk (GPR) and China's foreign trade, particularly the heterogeneous import and export effects across regions. To fill this gap, this study adopts the asymmetric Granger causality test to explore the causal link between the China GPR Index (CGPR) and its import and export volume with eight major trading regions (the US, Japan, South Korea, Australia, India, Russia, ASEAN and the EU), using monthly data from January 2014 to June 2025. The empirical results reveal significant asymmetric Granger causality between China's GPR and foreign trade, with notable differences in causal intensity and direction during the upward/downward trends of the CGPR and trade expansion/contraction. Distinct regional heterogeneities are also identified, and the two‐way causal interaction features long‐term persistence, with GPR exerting sustained effects on medium‐ to long‐term trade growth rather than short‐term fluctuations. Notably, asymmetry implies that policymakers should formulate asymmetric risk response policies, such as reinforcing trade resilience during GPR surges and seizing trade growth opportunities during GPR downturns, while adopting regionally differentiated strategies. Accordingly, this study provides concrete empirical support for targeted foreign trade and GPR policies that are critical to stabilizing China's trade growth amid a complex international landscape.