The impacts of COVID-19 pandemic on China’s transport sectors based on the CGE model coupled with a decomposition analysis approach

Abstract

As one of the most vulnerable sectors exposed to the COVID-19 pandemic, transport sectors have been severely affected. However, the shocks and impact mechanisms of infectious diseases on transport sectors are not fully understood. This paper employs a multi-sectoral computable general equilibrium model of China, CHINAGEM, with highly disaggregated transport sectors to examine the impacts of the COVID-19 pandemic on China's transport sectors and reveal the impact mechanisms of the pandemic shocks with the decomposition analysis approach. This study suggests that, first, multiple shocks of the COVID-19 pandemic to transport sectors are specified, including the supply-side shocks that raised the protective cost and reduced the production efficiency of transport sectors, and the demand-side shocks that reduced the demand of households and production sectors for transportation. Second, the outputs of all transport sectors in China have been severely affected by the COVID-19 pandemic, and passenger transport sectors have larger output decreases than freight transport sectors. While the outputs of freight transport sectors are expected to decline by 1.03–2.85%, the outputs of passenger transport sectors would decline by 3.08–11.44%. Third, with the decomposition analysis, the impacts of various exogenous shocks are quite different, while the changes in the output of different transport sectors are dominated by different exogenous shocks. Lastly, while the supply-side shocks of the pandemic would drive output decline in railway, waterway, and aviation transport sectors, the demand-side shocks would drive so in the road, pipeline, and other transport sectors. Moreover, the COVID-19 pandemic has negative impacts on the output of most non-transport sectors and the macro-economy in China. Three policy implications are recommended to mitigate the damages caused by the COVID-19 pandemic to the transport sectors.