Abstract
The recent rise of Chinese overseas development assistance activities has inspired debate on various issues—to include the changing nature of world order. Amid this debate, this paper investigates the impact of the Belt and Road Initiative (BRI). It applies the gravity model and analyzes Chinese foreign aid data to reveal the impact of BRI on China’s trade with Central Asian countries. This study argues that the change in trade patterns in Central Asian countries is attributed to Chinese investment in the region’s infrastructural connectivity. The empirical results using panel data show that a 1% increase in bilateral official development flows (ODF) of China specific to five Central Asian countries leads to a 0.238% increase in Chinese bilateral trade volume with these recipient countries. Moreover, the impact of Chinese bilateral ODF (0.046%) is larger than the impact of the OECD’s average ODF (0.0077%) and Chinese bilateral ODF specific to five Central Asian countries have an even larger than average Chinese ODF impact (0.238%). This greater degree of impact of Chinese ODF is related to geographical proximity and to improvements in infrastructure connectivity. Recent trade increases between China and Central Asian countries are attributed to the recent construction of oil and gas pipelines under the BRI scheme and a rise in the export of Chinese manufacturing products.
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Source: Author’s calculation based on UN comtrade
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Notes
It is known as the shortest distance between two points on the surface of a sphere. It uses latitudes and longitudes of the mostly populated cities.
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Lee, E. The Belt and Road Initiative: Impact on Trade Patterns Between China and Central Asia. East Asian Community Rev 1, 185–198 (2018). https://doi.org/10.1057/s42215-019-00015-3
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DOI: https://doi.org/10.1057/s42215-019-00015-3