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Impact of the China–Australia FTA on global coal production and trade

Hongjin Xiang, Yanxiang Kuang and Chenhua Li

Journal of Policy Modeling, 2017, vol. 39, issue 1, 65-78

Abstract: Using a computable partial equilibrium model, this study provides a comprehensive and prospective empirical analysis of the economic impacts of the China–Australian Free Trade Agreement (ChAFTA) on global coal output, trade, consumption and welfare. Based on data from 2014, the simulated results indicate that ChAFTA has a significant trade creation effect. ChAFTA will increase Australia’s coal exports to China by 35.7% and China’s exports to Australia by 19.9%. However, the impacts of ChAFTA on global coal production and price are relatively limited. Results also demonstrate that ChAFTA will cause an annual net welfare loss of US$ 200 million for China and a net welfare gain of US$ 569.3 million for Australia. Moreover, Chinese consumers and Australian coal producers are the biggest beneficiaries of ChAFTA. Based on the research conclusions, we put forward some policy recommendations.

Keywords: China–Australia FTA; GSIM model; Global coal trade; Welfare effects (search for similar items in EconPapers)
JEL-codes: C63 F13 F17 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:jpolmo:v:39:y:2017:i:1:p:65-78