ifo Institute: New Silk Road to Increase Trade between Bavaria and China by 8 Percent in the United States and Parts of Europe
China’s Silk Road Initiative can help Bavarian companies enter new markets and ease access to raw materials. This is the result of a new ifo study for the Chamber of Industry and Commerce for Munich and Upper Bavaria. The ifo Institute expects the New Silk Road to increase trade between Bavaria and China by 8 percent, with exports expected to grow by EUR 2.2 billion. Trade with the transit countries in Central Asia could increase by 3 percent and exports by EUR 53 million.
The initiative’s improved infrastructure would above all help to reduce transport costs. However, caution is still required with regard to investments in Central Asia, as the level of economic and political risk in this region remains high. It is conceivable that China or the transit countries might exclude others from access to the New Silk Road. The authors call on policy makers to put in place the framework necessary to make the New Silk Road an economic success for Bavaria and Germany, too. This would enable European companies to benefit from changes in the countries along the Silk Road and remain competitive. It would be worthwhile to deepen relations with these countries and to work toward a reliable legal and economic basis for business, as this would facilitate market access for German companies. In addition, risks must be reduced, e.g., by granting export guarantees to these countries, but also by safeguarding payment transactions in the event of sanctions by third countries.
According to the study, China wants to cooperate with 71 countries – which (including China) represent 65 percent of the world’s population – via the New Silk Road’s six land corridors as well as improved sea connections between almost 30 ports in Asia and Europe. Investments and construction contracts worth USD 489 billion have flowed into these countries since the start of the initiative in 2013.
Publication
Bickenbach, Frank / Felbermayr, Gabriel / Goldbeck, Moritz / Liu, Wan-Hsin / Sandkamp, Alexander-Nikolai, "Megatrends im Welthandel: Die neue Seidenstraße", Impulse für die Wirtschaftspolitik, 01-92, 2019 | Information
