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Trade Agreements and Global Value Chains: New Evidence from China’s Belt and Road Initiative

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  • Fei Peng

    (School of International Economics and Trade, Shanghai Lixin University of Accounting and Finance, No.995 Shangchuan Road, Shanghai 201209, China)

  • Lili Kang

    (School of Business Administration, Shanghai Lixin University of Accounting and Finance, No.995 Shangchuan Road, Shanghai 201209, China)

  • Taoxiong Liu

    (School of Social Science, Tsinghua University, HaiDian District, Beijing 100084, China)

  • Jia Cheng

    (Department of Auditing, Pan Shulun Honors College, Shanghai Lixin University of Accounting and Finance, No.995 Shangchuan Road, Shanghai 201209, China)

  • Luxiao Ren

    (Department of Accounting, Pan Shulun Honors College, Shanghai Lixin University of Accounting and Finance, No.995 Shangchuan Road, Shanghai 201209, China)

Abstract

This paper investigates the relationship between China’s trade agreements (TAs) and partner countries’ upgrade in global value chains (GVCs). We focus on the experience of China and relate China’s TAs with one belt and one road (OBOR) initiative. A structural equation model (SEM) is applied on a dataset including 216 countries and regions to identify the direct and indirect effects of China’s TAs and OBOR initiative on its export, outwards foreign direct investment (OFDI) and partner economy’ GVCs upgrade over the period 2010–2015. We find that China’s TA partner countries are more likely to be included in the OBOR initiative than those non-TA partner countries. The positive effects of China’s TAs and OBOR initiative on China’s export, outwards foreign direct investment (OFDI) and partner countries’ upgrade in GVCs differ across country groups at the different locations of GVCs. Both vertical and horizontal spillover effects exist in China’s TAs. Therefore, the partner countries at low end and middle of GVCs might benefit more from TAs with China than those richer countries at the high end of GVCs.

Suggested Citation

  • Fei Peng & Lili Kang & Taoxiong Liu & Jia Cheng & Luxiao Ren, 2020. "Trade Agreements and Global Value Chains: New Evidence from China’s Belt and Road Initiative," Sustainability, MDPI, vol. 12(4), pages 1-24, February.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:4:p:1353-:d:319743
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