The potential of China's tea trade and how it affects China's economic growth

Abstract

Tea is an essential commodity for China's agriculture trade, which faces fierce competition in the global tea trade. The export share of tea in China has a smaller proportion than other products, which means that it can influence on the economic growth or otherwise. This study aims to examine the potential destination countries for China's tea trade in the international market and its impact on economic growth. In this study, the panel-based gravity model was applied by identifying the potential destination countries for tea by using data of bilateral trade between China and 78 importing countries from 2010 to 2020. The Autoregressive Distributive Lag (ARDL) from 1991 to 2020 was used to evaluate the effect of China's tea export on economic growth. The result confirmed that 39 countries were identified as a potential destination for China's tea trade. A positive and significant effect of the tea trade on the country's economic growth in the long and short run was also found, particularly through export activity. China needs to increase the production of tea and to establish relations with the identified potential destination countries for tea exports in order to achieve a higher level of economic growth.