Border effect of agricultural trade between China and the Belt and Road countries: a computable general equilibrium model analysis

Abstract

In this paper, we constructed a global trade computable general equilibrium model using the input-output table data in 2002, 2007, 2010, and 2015 to measure the border effect of the bilateral trade of agricultural products between China and the Belt and Road (B&R) countries, and designed a simulation analysis under different scenarios for the impact of the B&R initiative on China’s agricultural trade. We discovered that: (1) The border effect of agricultural product trade between China and the B&R countries decreased by 20.9% in 2015 compared with that in 2010, which means that the B&R initiative to some extent reduced the trade barriers and promoted the bilateral agricultural trade between China and the B&R countries. (2) There are different changes in border effect between China’s domestic regions and between unilateral and bilateral border, the decline of border effect in China’s costal area is larger than that in inland area, and the decline in import border is larger than that in export border. (3) With the improvement of the B&R framework and the implementation of supporting policies, the decline in trade costs and in local agricultural product preference as well as the agricultural technology progress will further reduce the border effect. China’s domestic regional trade gap will gradually narrow, the bilateral agricultural trade will be highly active, and the continuous growth of agricultural trade will emerge between China and the B&R countries.