Trade Sustainability and Efficiency under the Belt and Road Initiative: A Stochastic Frontier Analysis of China's Trade Potential at Industry Level

This study calculates the export trade potential and trade efficiency of China to countries along the Belt and Road within the HS 2-digit code sectors; the influencing factors are also analyzed using the one-step method. The stochastic frontier gravity model is applied on a dataset including 35 countries during 2009-2017. The results indicated that the trade resistance of China's export to countries along the Belt and Road has increased over time, while there is still huge trade potential at various industries. Moreover, trade efficiency is high in mechanical and electrical products, iron or steel articles, and furniture and bedding. Low-efficiency products include live animals, cork, vegetable plaiting materials, tin, and arms. To further improve the trade efficiency, it is necessary to strengthen the cooperation with the countries along the Belt and Road in infrastructure construction and investment based on the free trade area. These findings have great significance for the sustainable and high-quality development of the Belt and Road initiative.

Automated summary

This study analyzes China's export trade potential and trade efficiency to countries along the Belt and Road through the application of the stochastic frontier gravity model. It found that China has high trade efficiency in mechanical and electrical products, iron or steel articles, and furniture and bedding, while lower efficiency is seen in live animals, cork, vegetable plaiting materials, tin, and arms. Strengthening cooperation in infrastructure construction and investment is crucial for further improving trade efficiency.