Impacts of the belt and road initiative on China's bilateral trade

This study contributes to the existing literature by empirically analyzing the impacts of the Belt and Road Initiative (BRI) on China's bilateral trade. Applying an augmented gravity model to trade flows between China and its 190 trading partners, of which 140 countries have signed the BRI agreements sequentially, during the period 2012-2020, we find that: (1) The BRI can significantly increase the extensive and intensive margins of China's exports and imports, while reducing China's trade surplus. (2) The BRI stimulates trade quantities, while lowering unit values of traded products. (3) These effects vary by income level and product category. In short, the BRI has been quite effective in strengthening China's global trade position and it is also beneficial to both trading parities. Policy implications are proposed accordingly.