POTENTIAL AND INFLUENCING FACTORS OF INTRA-INDUSTRY TRADE BETWEEN CHINA AND RCEP PARTNERS: EVIDENCE FROM THE GRAIN INDUSTRY

Abstract

This paper investigates China’s grain trade potential and the influencing factors with RCEP partner countries by using the stochastic frontier gravity and trade inefficiency models and explores the impact of the RCEP negotiations on grain trade cooperation between China and RCEP partner countries. The research results verify that the institutional distance, economic distance, and tariff level hinder the grain trade efficiency between China and RCEP partner countries, where the tariff level has the smallest resistance. The transportation and communication infrastructure level can significantly improve the grain trade efficiency, but the transportation infrastructure level has a greater stimulative effect. China’s grain trade potential with RCEP partner countries is enormous, and there is evident heterogeneity in the grain trade potential of different countries. The grain trade relations between China and RCEP partner countries have been improved after the RCEP negotiations. However, there are still greater trade potential and expansion space for New Zealand and Laos. Therefore, some policy suggestions are put forward, such as establishing the risk assessment and early warning system, implementing the tariff reduction measures in the agreement, and developing grain trade cooperation according to local conditions, which provides practical guidance for expanding the grain trade scale.