Changes in the structure of trade between China and the countries of central and eastern Europe in the period after the initiation of format 17+1

Abstract

The paper discusses the consequences of cooperation between China and CEE countries, also known as 17+1, an initiative founded in 2012 by Beijing to promote business and investment relations between China and those economies. The main hope of CEE countries was that they would be able to reduce their strong trade deficits, but today the question arises whether their expectations were unrealistic. After calculating the quantitative indicators of cumulative CEE trade with China in 2011-2018, the author tested the first hypothesis, i.e. whether structures of merchandise exports from CEE countries have become better adjusted to the commodity imports structure of China. In order to prove that hypothesis, the study used four indicators of similarity: Cosines and the Finger-Kreinin similarity index, as well as the Bray-Curtis and Integrated Similarity Index. To improve the analysis, the author controlled for additional factors such as changes in CEE countries’ export structures through tendencies of shares of medium and high-tech products in their total exports. The second hypothesis is that in the observed period major CEE economies detected positive qualitative changes in their merchandise exports to China. The qualitative changes in CEE economies’ exports to China are measured through tendencies in the shares of skill-intensive manufacturing, whose eventual increase would create important conditions for their sustainable and stronger growth. The findings show that with a modest growth of CEE exports to China from 2011 and with a lack of structural improvements, there is no doubt that the scales of economic benefits seem to be tipping in favour of China.