The impact of China’s financing to Africa on bilateral trade intensity under the Belt and Road Initiative

Yan Wu, Xueyu Wang and Cong Hu

Applied Economics, 2024, vol. 56, issue 37, 4507-4527

Abstract: Based on panel data from 2000 to 2021 covering African 52 countries under the Belt and Road Initiative (BRI), and utilizing a system generalized method of moments with instrumental variables, the study finds that China’s financing has played a positive role in both export and import intensities of African countries with China. However, the impacts of different financing types on trade intensities vary by different country groups and periods. First, Chinese outward foreign direct investment (OFDI) has a much bigger impact on both export intensity and import intensity, and aid has a much bigger impact on export intensity in resource-rich African countries than other countries. Second, Chinese OFDI has a much bigger impact on export intensity and aid has a much bigger impact on both export and import intensities in low-income African countries than other countries. Third, the regression results from different periods indicate that Chinese financing has enhanced the bidirectional trade relations between China and Africa since BRI launch. The study is conducive to the exploration of multinational corporations and foreign aid’s role in trade relations and will help African countries use Chinese capital to promote bilateral cooperation and get rid of poverty.

Date: 2024
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DOI: 10.1080/00036846.2023.2276088

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