Abstract

Research background: After China acceded to the WTO in 2001, its foreign trade has expanded rapidly to be the largest share in the world. However, China's economic development changing from high-speed growth to medium high-speed growth in recent years. At the same time, the increase in labour cost and overcapacity also hinder China’s international trade. In order to solve these challenges and strengthening ties with other countries, China proposed the “One-Belt One-Road” (OBOR) initiative in the end of 2013.

Purpose of the article:  In this study, we examine the potential effects of “One-Belt One-Road” (OBOR) initiative on China’s trade flows and global value chain connections. The purposes of our research are: (1) examining the impact of OBOR on China’s bilateral exports and GVC (2) analyzing and determining which routs (corridors) of OBOR are more important.

Methods: The gravity trade model employed in analyzing the impact of OBOR on exports and the samples covers China and 197 partners in the period 2000-2018. It is used in the empirical analysis of domestic value-added and value contributed to China’s export.

Findings & Value added: Overall, the role of OBOR in China’s exports and GVC are positive based on the empirical results. Compared with OLS and FE methods. FE-PPML estimation methods is a superior. In OBOR six corridors, Bangladesh-China-India-Myanmar (BCIM), China-Pakistan (CP) and China Indochina Peninsula (CIP) were proven to play a prominent role in promoting China’s export and global value chains.

Citations

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