China’s Belt and Road Is Redirecting Global Trade, Not Just Expanding It

China's Belt and Road Initiative has long been assessed through the infrastructure it finances and the trade it generates. A 2026 paper in The World Economy shifts attention to a harder question: when participating countries gain easier access to China, what happens to countries competing for the same market? The Direct and Indirect Effects of the Belt and Road Initiative on Exports to China, by Haonan Li and Yasuyuki Todo, traces both sides of this trade equation across nearly two decades.

Using data for 187 countries from 2006 to 2023, the researchers find that participation in the BRI significantly increases exports to China, with infrastructure emerging as an important channel. Still, the gains do not remain confined to participants. Countries with industrial structures similar to those of BRI members lose export ground in China, while geographically nearby economies receive no measurable trade boost simply because infrastructure has expanded next door.

The result presents the BRI less as a collection of bilateral projects and more as a mechanism capable of changing competitive relationships across international markets. Trade created for one country can alter market access for another, while firms pushed out of China may respond by selling elsewhere rather than producing less.

Infrastructure Gains Take Time, but They Can Reshape Export Capacity

The researchers do not detect an immediate surge in exports after countries join the BRI. Export gains become statistically significant several years after participation, with the strongest effects appearing later in the post-entry period. The pattern is consistent with the long timelines required for transport infrastructure, logistics systems and commercial networks to influence actual trade flows.

By the fifth period after participation, the estimated increase in exports to China is approximately 40%, rising to around 80% by the seventh period. These are model-based estimates rather than simple changes in trade totals, but their trajectory suggests that the economic effect of connectivity programmes may accumulate rather than appear at project launch.

Infrastructure provides the clearest explanation identified by the researchers. The analysis examines rail infrastructure and broadband subscriptions alongside institutional quality and political relationships. Broadband connectivity improves significantly in participating countries, although the authors caution that pre-existing trends complicate interpretation, while rail-line estimates do not independently produce a statistically significant effect.

Stronger evidence emerges when infrastructure indicators are incorporated into the export models. The estimated BRI export effect weakens in later periods, suggesting that improvements in connectivity account for part of the gains. Participating countries also increase exports to destinations other than China, reinforcing the argument that the initiative may improve broader export capacity rather than merely create a privileged bilateral route into the Chinese market.

Institutional indicators and diplomatic relations move in a positive direction in parts of the analysis, but they do not explain the export increase in the same way. Once those factors are controlled for, the trade effect largely remains. The research places productive and logistical capacity closer to the centre of the export story than political alignment alone.

The Bigger Shift Happens Between Competitors, Not Neighbours

Instead of treating non-participating countries merely as a comparison group, the authors examine whether their trade changes when competing economies enter the initiative. They separate two possible channels: geographic proximity and similarity in industrial structure.

The geographic channel produces little evidence of a regional trade dividend. Countries located near BRI participants do not significantly increase exports to China as neighbouring infrastructure improves. Proximity alone, in other words, does not appear sufficient to pull non-members into the trade networks generated by the initiative.

A different pattern emerges among economies with similar manufacturing structures. When BRI members become more competitive exporters to China, structurally similar non-members experience lower exports to the Chinese market. The authors interpret the result as consistent with competitive crowding out: improved trade efficiency in participating countries changes the relative position of suppliers selling comparable goods.

This has considerable policy relevance. International infrastructure programmes are often discussed through maps and corridors, with neighbouring economies assumed to benefit from improved transport links. The research suggests that industrial structure may sometimes be a more powerful predictor of economic exposure than physical distance.

For developing countries, the implication is important because many compete in overlapping segments such as resource processing, basic manufacturing and labour-intensive exports. A country can therefore face significant consequences from a connectivity initiative even without hosting a project or sharing a border with a participating economy.

Trade Is Being Redirected Rather Than Simply Lost

Competitive displacement from China does not appear to translate into an equivalent fall in total exports. The researchers find that countries losing market share in China increase exports to destinations outside the Chinese market. Their production is not necessarily extinguished; its destination changes.

This trade reallocation changes how the BRI's international impact should be interpreted. If displaced exports had simply disappeared, the evidence would point toward a straightforward contraction for competing economies. Redirected sales instead indicate adaptation, with exporters searching for alternative demand when their competitive position deteriorates in China.

The destination shift also raises questions that aggregate export statistics cannot resolve. Alternative markets may offer different prices, transport costs, regulatory requirements or profit margins. A country could maintain export volume while experiencing a deterioration in commercial returns, or it could diversify successfully and reduce dependence on a single major market.

Sectoral results reinforce the uneven nature of the trade effects. Clearer gains are identified in chemicals, base metals and textiles, while results across many other product groups are weaker or inconsistent. The pattern suggests that the benefits of connectivity depend heavily on what an economy produces and how sensitive those products are to logistics costs, Chinese demand and competitive pressures.

The size of the estimated negative spillover also requires caution. One spatial specification produces an unusually large parameter, leading the authors to test shorter estimation windows. The negative relationship remains under those alternatives, but its magnitude changes substantially. The robust conclusion is therefore the direction and pattern of the competitive effect, not a precise numerical estimate of how much trade non-members lose.

The Policy Question Is No Longer Connectivity Alone, but Who Captures Its Value

The research complicates a familiar assumption in infrastructure-led development: improving connectivity in one country does not automatically spread commercial gains across an entire region. BRI infrastructure appears capable of strengthening participating economies while leaving nearby non-members outside the resulting trade expansion.

For governments inside the initiative, the findings strengthen the case for treating transport and digital infrastructure as instruments of productive competitiveness. Roads, ports and communications networks affect more than the movement of goods; they can alter the cost structure through which firms compete for international markets.

For non-member economies, the more urgent task may be understanding exposure to competitors rather than simply tracking nearby construction. Export agencies and industrial ministries could benefit from identifying product categories where domestic suppliers compete directly with countries receiving new logistics capacity, financing or integration with major destination markets.

Regional cooperation becomes equally important. Infrastructure networks generate wider economic value only when national systems connect effectively across borders. Harmonised standards, interoperable transport systems and coordinated logistics can determine whether a corridor functions as a regional platform or primarily strengthens bilateral trade between individual participating countries and China.

The paper also leaves several questions unresolved. It measures export value rather than export quality, profitability, domestic value added or employment effects. It does not determine whether participating economies move into more sophisticated production, nor whether displaced exporters reach equally valuable markets when they redirect sales.

Global value chains remain another major gap. Infrastructure can affect where intermediate goods are sourced, where production stages are located and how countries participate in cross-border manufacturing networks. More disaggregated research could reveal whether the BRI changes countries' positions within these chains rather than merely altering their recorded export values.

For the broader development debate, the research offers a more demanding framework for judging large connectivity initiatives. Their economic footprint cannot be captured by counting infrastructure projects or measuring bilateral trade growth alone. The relevant question is how lower trade costs change the distribution of market access across participants, competitors and neighbouring economies.