Impact of the Belt and Road Initiative on the United States’ textiles and clothing imports from Asian countries: Evaluating the significance of Chinese aid and ACFTA

Abstract

This study analyzes how Chinese aid and the ASEAN-China Free Trade Area (ACFTA) within the Belt and Road Initiative (BRI) impact Asian countries’ textiles and clothing (T&C) exports to the United States (US). The BRI is viewed as a hub-and-spoke network, with China as the central hub providing resources to the spoke countries along the Belt and Road region. These resources are intended to improve trade infrastructure and attract export-oriented foreign direct investment in the T&C sector. Utilizing an extended gravity model with a panel dataset, the study examines the effects of Chinese aid and ACFTA on the US T&C imports from 16 Asian economies between 2008 and 2019. The findings, obtained through the application of the feasible generalized least squares method, indicate a positive impact of Chinese aid and ACFTA on T&C exports. Policymakers are advised to leverage the BRI to stimulate T&C sector growth for export purposes, thereby creating more value for all stakeholders.