Time is money: Impact of China-Europe Railway Express on the export of laptop products from Chongqing to Europe

Abstract

Transport time is valuable in international trade, especially for relatively high value-to-weight products. The China Railway Express (CRE) can be viewed as an outcome of a policy aimed at reducing transport time. This study focused on CRE's transport time reduction and its policy effect on international trade. Based on a special case examining the early stage of the Chongqing-Sinkiang-Europe Railway Express (CSERE), we adopted a synthetic control method (SCM) to investigate the extent of the effect of transport time reduction on the export of high value goods. We found that opening the CSERE led to an improvement of almost USD 23.18 billion of laptop exports from Chongqing to Europe in the first three years. The results showed the considerable value of the transport time reduction and the potentially vast bilateral trade flow between China and Europe that could be created by CRE. Our analysis also explored the micro mechanism of such effect. Only when the saved time costs cover the extra expense compared with ocean-borne cargo could CRE be a profitable choice for exporters and thus create new trade. Our findings offer insight for operators of CRE and local governments: matching and attracting the transport demand of suitable goods are key to successful market-oriented operation.