Digital Economy, China International Trade Potential, Industries of BRI countries: Evidence from Stochastic Frontier Gravity Model

The article investigates the impact of digital trade on China’s trade efficiency, trade potential, and the possible influence factors of China to BRI nations under stochastic frontier gravity methodology framework. In this article, it follows previous studies and employ stochastic frontier gravity model to explore possible influence of digital trade and trade barriers on China’s foreign trade potential at country-level. It evaluates the influence factor of China export potential to BRI countries via the aspect of digital commerce. Moreover, this article enriches the BRI literatures by employing stochastics frontier gravity model to examine the impact of digital trade on China trade potential and trade efficiency to BRI countries. The results of the study support the important role of BRI in facilitating digital trade among BRI countries and China. In addition to revealing the factors affecting digital trade (e.g., GDP and distance, bordering issue), the results highlight the importance of considering non-efficiency factors, in our case, the negative impact of digital trade restrictions on trade efficiency. The findings may provide some insight for policy makers (in China and BRI countries) into loosening the digital trade restrictions and improve trade efficacy along the BRI.