China's Belt and Road Initiative: Can Europe Expect Trade Gains?

The Belt and Road Initiative (BRI) aims to improve cross‐border infrastructure to reduce transportation costs across a massive geographical area between China and Europe. We estimate how much trade might be created among Belt and Road (B&R) countries as a consequence of the reduction in transpor...

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Bibliographic Details
Published in:China & world economy 2017-11, Vol.25 (6), p.84-99
Main Authors: Herrero, Alicia Garcia, Xu, Jianwei
Format: Article
Language:English
Subjects:
Belt and Road Initiative
China
F02
Free trade
Infrastructure
international economic system
International trade
Landlocked countries
O19
O53
Railroads
Transport costs
Transportation
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Summary:The Belt and Road Initiative (BRI) aims to improve cross‐border infrastructure to reduce transportation costs across a massive geographical area between China and Europe. We estimate how much trade might be created among Belt and Road (B&R) countries as a consequence of the reduction in transportation costs (both railway and maritime) and find that European Union countries, especially landlocked countries, will benefit considerably. This is also true for Eastern Europe and Central Asia and, to a lesser extent, South‐East Asia. In contrast, if China were to seek to establish a free trade area within the B&R region, EU member states would benefit less, while Asia would benefit more. Xi Jinping's current vision for the B&R, centered on improving transport infrastructure, is advantageous for Europe as far as trade creation is concerned.
ISSN:1671-2234
1749-124X
DOI:10.1111/cwe.12222