E-commerce, Free-Trade Zones, and the Linkage Effect to China’s Foreign Trade

Abstract

With the rapid development of E-commerce, China’s foreign trade has been largely transformed. China now has the most online shoppers in the world, more than the US, United Kingdom, and Australia combined. The 21 nationwide free-trade zones (FTZs) and 109 import pilot zones for cross-border E-commerce (CBEC) across the country, which cover 30 provinces, autonomous regions and municipalities, have brought great transitions to trade patterns and the related factor proportions. Based on FTZ, Hainan Province began furtherly open pattern known as free-trade port (FTP) on June 1st, 2020. In this article, we apply the heterogeneous community effect model to study the linkage effect of CBEC and FTZs on China’s foreign trade, which creates higher demands, more value-added products, effective prices, and efficient labor market management by integrating domestic and foreign trade channels.