TRADE EFFICIENCY AND PROSPECTS: A STOCHASTIC FRONTIER GRAVITY MODEL OF CHINA'S TIMBER EXPORTS TO RCEP NATIONS

Abstract

The Regional Comprehensive Economic Partnership (RCEP) is a pivotal free trade agreement encompassing 15 countries, including 10 ASEAN nations, China, Japan, South Korea, Australia, and New Zealand. It aims to foster economic integration and development across the Asia-Pacific region. Notably, timber and wood products play a vital role in China's economic growth, with RCEP countries serving as major export destinations. The timber trade holds substantial significance within RCEP negotiations.

In 2021, RCEP members accounted for 10.9% of the global population and constituted 27.2% of the world economy, with a combined GDP of US$23 trillion. China's timber and wood product exports in the same year amounted to US$18.613 billion, with exports to RCEP partners reaching US$5.528 billion, making up 29.7% of the total.

The implementation of RCEP presents a unique opportunity to strengthen cooperation and enhance trade development among member states. Consequently, assessing China's export efficiency in the timber and wood products industry with RCEP members and identifying future potential is crucial for diversifying export channels and facilitating trade with partner nations. This study employs a stochastic frontier gravity model to quantitatively analyze China's timber and wood product export efficiency and estimate trade potential with RCEP members, shedding light on opportunities for improved trade facilitation.