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

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  • Ling Fang
  • Shamim Shakur

Abstract

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.

Suggested Citation

  • Ling Fang & Shamim Shakur, 2018. "Impact of trade cost on China-EU agri-food trade," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 16(3), pages 259-274, July.
    • Handle: RePEc:taf:jocebs:v:16:y:2018:i:3:p:259-274
    DOI: 10.1080/14765284.2018.1482089
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    Cited by:

    1. Teerasak Charoennapharat & Poti Chaopaisarn, 2022. "Factors Affecting Multimodal Transport during COVID-19: A Thai Service Provider Perspective," Sustainability, MDPI, vol. 14(8), pages 1-25, April.
    2. Jiajia Li & Abbas Ali Chandio & Yucong Liu, 2020. "Trade Impacts on Embodied Carbon Emissions—Evidence from the Bilateral Trade between China and Germany," IJERPH, MDPI, vol. 17(14), pages 1-19, July.
    3. Junshi Li & Yao Pan, 2023. "EU and China’s comparative advantage, trade complementarity and trade specialization dynamics in agricultural products," Asia Europe Journal, Springer, vol. 21(3), pages 351-379, September.

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