The Impact of Infrastructure Development on China–ASEAN Trade-Evidence from ASEAN

Abstract

From the formal dialogue between China and ASEAN in 1991 to the establishment of the China–ASEAN FTA in 2010, the economic and trade relations between China and ASEAN countries have developed rapidly. With the continuous development of economic and trade relations, the infrastructural level between China and ASEAN has far lagged behind the needs of exchanges and trade. How to promote the development of bilateral trade through infrastructure construction and interconnection has become a concern of governments of all countries. In the context of China’s “Belt and Road” Initiative and the “Master Plan for ASEAN Connectivity”, new ideas and opportunities are provided for ASEAN infrastructure construction and its interconnection with China. Based on panel data from 2004 to 2020, this paper analyzes the impact of ASEAN infrastructure on the China–ASEAN trade volume. The analysis finds that road, port, shipping and communication infrastructure positively impact the bilateral trade volume, among which ports exert the greatest impact on the bilateral trade volume and roads have the least impact. For a more in-depth study, the transportation infrastructures of land and island countries are compared and analyzed separately. The impact of road infrastructure on trade is significant for land countries, while the impact of port infrastructure on trade is more remarkable for island countries. Finally, measures and suggestions on how to promote the development of bilateral trade are proposed on the basis of the above analysis.