Does the belt and road initiative boost Chinese automobile exports? A staggered adoption approach

Abstract

ABSTRACT We examine whether China’s ambitious Belt and Road Initiative assisted its export performance in the final automobile sector, a market that has been challenging for the Chinese economy. We use the recent econometric technique of heterogeneity robust difference-in-difference estimators for staggered timing. We also control anticipation effects and potential BRI selection endogeneity using IVs and matching estimation. Using data from 2005 to 2019, our estimates find that China’s final automobile exports to the BRI partner destination countries after these countries became signatories almost doubled relative to that of the export to non-BRI partner destinations, and the effect for net-exports is an increase of about 59%. Sub-sample analyses indicate that the positive effect is stronger for China’s export to lower-income partners compared to its exports to relatively higher-income destinations, though the effects in the automobile industry is more balanced between high-income and low-income destinations, compared to overall exports where BRI’s impact. The results are robust across alternate methods and specifications.