Estimating the Extensive Margin of Exports in the Chinese Market: The Impact of Digital Trade Facilitation on Export Diversification

This study investigates the causal relationship between digital trade facilitation (DTF) and export diversification, as measured by the extensive margin (EM) of exports in the Chinese market. Findings from a preceding textual analysis of regional trade agreements (RTAs) indicate that high-income countries tend to exhibit better trade performance by engaging in deeper RTAs that have more comprehensive coverage of DTF provisions. Based on our analysis using various gravity regression models, we assert that the implementation of DTF significantly enhances the extensive margin of exports. Our analysis of mediating effects confirms that e-commerce expansion plays a crucial role in amplifying the positive impact of DTF on export diversification within the Chinese market. Furthermore, our findings indicate that the development of DTF and e-commerce is not solely limited by economic size and technology level. Consequently, we strongly encourage small and medium-sized enterprises (SMEs) in developing countries to proactively enhance their DTF capabilities to effectively utilize their RTA network.