Influence of CPEC–Flagship of Belt and Road Initiative on the agricultural trade of China

ABSTRACT

This study investigates the potential impact of China’s Belt and Road Initiative (BRI) on its agricultural exports. A gravity model was formulated to find the determinants of China’s agricultural exports. This model uses two measures of distance: Model 1A uses the great-circle measure of distance and Model 1B uses the existing real distance used between China and its trade partners. The determinants of both models are then used to simulate China’s pre-CPEC export potential in agricultural products. The results of Model 1B are then simulated, using the proposed real distance values to calculate China’s post-CPEC agricultural export potential. The findings for pre-CPEC exports show that a strong potential for agricultural exports exists for African, Middle Eastern, and other countries. The findings for post-CPEC trade show that there will be a tremendous increase in the export potential for African and Middle Eastern countries that can be attributed to BRI.

KEYWORDS:

• Belt and Road Initiative (BRI)
• agricultural trade
• gravity model
• export potential

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. Debasish, R., & Chowdhury, D.R. (19 November 2013). Pakistan happy to aid in China’s quest for land route to the west; India, not so much. South China Morning Post. Retrieved 8 August 2017, from http://www.scmp.com/business/commodities/article/1359761/pakistan-happy-aid-chinas-quest-land-route-west-india-not-so

2. As defined by the World Bank, it is the value corresponds to ISIC divisions 1–5 and includes forestry, hunting, and fishing, as well as the cultivation of crops and livestock production. Value added is the net output of a sector after adding up all outputs and subtracting intermediate inputs. It is calculated without making deductions for the depreciation of fabricated assets or the depletion and degradation of natural resources. The origin of value added is determined by the International Standard Industrial Classification (ISIC), Revision 3. Note: For VAB countries, gross value added at factor cost is used as the denominator.

Additional information

Notes on contributors

Majid Lateef

Dr. Majid Lateef completed his Ph.D. from Northeast Forestry University, Harbin, China. He is currently working with Baise University, Guangxi, China as an Assistant Professor of Economics & Management. His research interests include international trade, regional integration and Belt & Road Initiative (BRI), etc.

Muhammad Usman Riaz

Dr. Muhammad Usman Riaz is working as a research assistant at the School of Economics and Management at Harbin University of Science and Technology, China. He is currently also serving as a visiting lecturer at Institute of Banking and Finance at Bahauddin Zakariya University, Pakistan. His current research interests include the adoption of social commerce, social media marketing, the Impact of SNSs, Green purchase intention, and trade.