The impact of "Maritime Silk Road" on trade between China and OBOR countries : trade relations between China and ASEAN countries

• Main Author: Quek, Chen Sang
• Other Authors: Chiu Sai Hoi, Benson
• Format: Final Year Project
• Language: English
• Published: 2016
• Subjects: DRNTU::Engineering
• Online Access: http://hdl.handle.net/10356/67128
• Institution: Nanyang Technological University

One Belt One Road (OBOR) initiative is a massive trade and infrastructure project that comprises of two important networks: Silk Road Economic Belt and 21st Maritime Silk Road. Our group focused on the impact of 21st Maritime Silk Road on the bilateral trade between China and countries along the road. This paper’s objective was to investigate the trade relations between China and the ASEAN ten countries and to estimate the trade potential for growth between China and the sample countries. By applying the gravity model, a panel data framework was constructed to cover the period of ten years from 2005 to 2014. Among three models of panel data estimation, the random effect was chosen over the fixed effect and the pool estimation. The main findings showed that market size (Population), economic size (GDP), and currency exchange rate fluctuation were the three key drivers in bilateral trade between China and ASEAN ten countries. Nevertheless, China Total Container Throughput and distance were found to have insignificant relations with the trade. From the calculation of trade potentials, results showed that half of the ASEAN ten countries (Myanmar, Brunei, Laos PDR, Vietnam and Cambodia) have not fully exploited their potential in the trade with China. With the support of trade facilitation, these underperforming countries can increase their trade volume by improving the transportation infrastructure, which is one of the OBOR objectives. Another important issue of this paper was to analyse the impact of OBOR, in terms of trade facilitation, on the bilateral trade between China and ASEAN ten countries. Among three trade facilitation measures, bilateral liner shipping connectivity had the most significant relation to trade. This showed that the liner shipping company plays an important role in trade facilitation which is the key to improve current trade volume.