Role of Virtual Water Trade Under the Generalized Trade Framework in Xinjiang’s Economic Sustainable Development

Abstract

Xinjiang had been suffering from acute water scarcity, which is an important constraint factor for its economic sustainability. Virtual water plays an important role in its sustainable development, and this paper tries to re-investigate the role of virtual water trade among the generalized trade framework in its sustainable development. The term generalized trade encompasses both physical and virtual trade. Physical trade refers to the transfer of commodities in monetary or barter form, and virtual trade refers to the transfer of inputs embodied in physical form (e.g., virtual water, energy, or land). It was in the water-scarce status, but it transported a net volume of about 13.1 billion tons of water to other economies, 94.6% of which was transported to other provinces. This phenomenon is contradictory to the comparative advantage theory. Water is a critical input in the production of commodities, but it is only one factor from the perspective of generalized trade. It is rich in energy resources but imports a large amount of external virtual energy from other provinces. Many labors come to Xinjiang both in physical and virtual senses. This situation indicates that generalized trade plays a more important role, and suggests that it should continue to improve its industrial system and optimize its business environment.