Do Geopolitical Relations Affect Export Performance? Evidence From China’s Exports to Countries Along the Belt and Road Initiative

Geopolitical relations have altered the global trade distribution, making it no longer solely influenced by the profit-driven strategies of multinational corporations. This study explores how geopolitical relations influence China’s export performance to countries along the Belt and Road Initiative (BRI), utilizing data from the GDELT event database and the CEPII-BACI database. The results indicate that geopolitical relations contribute to improving China’s export performance to BRI countries, mainly by lowering trade costs and promoting outward foreign direct investment. Further analysis indicates that this positive effect is mainly achieved through export depth rather than export breadth. Moreover, geopolitical relations do not alter the industries that reflect China’s comparative advantage in exports to BRI countries. Heterogeneity analysis shows that the influence of geopolitical relations is significantly stronger on intermediate goods than on consumer and capital goods, and more pronounced for manufactured industrial products compared to primary products. Additionally, the influence is greater on non-Asian countries and on countries that do not share a border with China compared to neighboring countries. Extended analysis reveals that institutional quality gaps negatively moderate the relationship between geopolitical relations and export performance, whereas the BRI exerts a positive moderating effect.