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Sustainability 2018, 10(9), 3242; https://doi.org/10.3390/su10093242

“One Belt, One Road” Initiative to Stimulate Trade in China: A Counter-Factual Analysis

1
Department of Information Management, National Kaohsiung University of Science and Technology, Kaohsiung 82444, Taiwan
2
Business School, Hubei University, Wuhan 430062, China
*
Author to whom correspondence should be addressed.
Received: 26 July 2018 / Revised: 26 August 2018 / Accepted: 29 August 2018 / Published: 11 September 2018
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Abstract

This research implements the panel data control method to evaluate the stimulative effects of the “One Belt, One Road” initiative on trade performance in China. We constructed a counterfactual of China’s trade surplus by exploiting the unobservable common factors that create observable trade balances among other countries. We also modified the traditional control group selection by extending it to the Elastic-Net method. This study found the following: (i) China’s annual trade surplus increased sharply by 10.69% on average since 2015. In contrast, analysis of the counterfactual showed that the net exports of China would have remained constant without the stimulation of the “One Belt, One Road” initiative; (ii) These results are robust to exports growth rates and checking by various control group selections; (iii) Although the analysis shows return to an average trading balance, we should not underestimate the benefits of the initiative in the long run. View Full-Text
Keywords: “One Belt One Road” initiative; trade; counter-factual analysis “One Belt One Road” initiative; trade; counter-factual analysis
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Chen, S.-C.; Hou, J.; Xiao, D. “One Belt, One Road” Initiative to Stimulate Trade in China: A Counter-Factual Analysis. Sustainability 2018, 10, 3242.

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