The Impact of China’s Overseas Economic and Trade Cooperation Zones on Sustainable Trade of Host Countries

Abstract

Under the concept of “government-guided, enterprise-led, and market-oriented” operation, the Chinese Overseas Economic and Trade Cooperation Zones (COCZs) have developed a new type of international production pattern, which has become an effective way for developing countries to integrate into the global production network sustainably. Based on the COCZ data collected manually and country-level panel data from 1997 to 2019, this study innovatively analyzes the sustainable trade effect of COCZs with the difference-in-differences method. The research finds that the establishment of COCZs significantly boosts the import and export of the host country in a sustainable manner. Further analysis finds that COCZs can promote the sustainable trade growth of the host country in three aspects: economic, societal, and environmental. This sustainable trade effect is closely related to the institutional improvement and infrastructure construction generated by COCZs. By providing a comprehensive and rigorous analysis of the impact of COCZs on the host country’s trade performance, the paper effectively responds to the criticisms on China’s “going out” strategy, which is often based on biased assumptions and a lack of empirical evidence. It also provides policy implications for both China and the host countries to enhance the cooperation and mutual benefits of COCZs.