“One Belt, One Road” Initiative to Stimulate Trade in China: A Counter-Factual Analysis

Shih-Chih Chen, Jianing Hou and Xiao De
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Shih-Chih Chen: Department of Information Management, National Kaohsiung University of Science and Technology, Kaohsiung 82444, Taiwan
Jianing Hou: Business School, Hubei University, Wuhan 430062, China
Xiao De: Business School, Hubei University, Wuhan 430062, China

Sustainability, 2018, vol. 10, issue 9, 1-13

Abstract: This research implements the panel data control method to evaluate the stimulative effects of the “One Belt, One Road” initiative on trade performance in China. We constructed a counterfactual of China’s trade surplus by exploiting the unobservable common factors that create observable trade balances among other countries. We also modified the traditional control group selection by extending it to the Elastic-Net method. This study found the following: (i) China’s annual trade surplus increased sharply by 10.69% on average since 2015. In contrast, analysis of the counterfactual showed that the net exports of China would have remained constant without the stimulation of the “One Belt, One Road” initiative; (ii) These results are robust to exports growth rates and checking by various control group selections; (iii) Although the analysis shows return to an average trading balance, we should not underestimate the benefits of the initiative in the long run.

Keywords: “One Belt One Road” initiative; trade; counter-factual analysis (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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