Study on the economic effects of China and ASEAN countries from the New International Land-Sea Trade Corridor: Fid-Bau Portal

Study on the economic effects of China and ASEAN countries from the New International Land-Sea Trade Corridor

Huang, Qingbo / Zhang, Xiaohan / Li, Yan

Abstract The New International Land-Sea Trade Corridor (ILSTC) is a rail-sea intermodal transport corridor whose fundamental purpose is to closely connect western China and ASEAN through shortening the transport distance and trade time cost. Since the ILSTC is still a new initiative, there are few research focusing on its performance and implementation effects. Using computable general equilibrium (CGE) model, this paper attempts to analyze the economic impacts of the ILSTC since 2019 by simulating the scenario of transport time cost reduction. Results show that the ILSTC can promote the gross domestic product of China and the entire ASEAN by 0.20% and 0.84%, respectively; China's and the whole ASEAN's social welfare are both improved by more than US$10 billion; China's export and import with the whole ASEAN increases by 9.97% and 9.54%, respectively; The value-added trade flow contained in China's intermediate products which export to ASEAN countries first and finally return to China become larger; The impact on different sectors are heterogeneous, in which bilateral value-added and gross trade of grains and crops would increase most significantly; The value-added provided from service industry are also improved. Overall, the ILSTC plays a more important role in promoting the macro-economy of China and ASEAN countries than trade liberalization. On these basis, related conclusions for the promotion of commercial relationship between China and ASEAN countries are proposed, hoping to provide reference for traders and policy makers.

Highlights • Measure the economic effects of China and ASEAN countries from the New International Land-Sea Trade Corridor (ILSTC). • Expand the simulation results from the perspective of value-added trade to track changes in intra-industry trade. • Shed lights on better policy options between trade liberalization and the ILSTC for policy makers.