RETRACTED: Export credit insurance in a transitional economy: Evidence from China

Abstract

China is the world’s largest exporter, and is also one of the few economies that have successfully transitioned from central-planned to market-oriented economy. In this paper, we analyze the effect of China’s official export credit insurance on Chinese exports to countries in the world. We describes the background of official export insurance in general and the development of China’s ECI. Meanwhile, we discuss the data and model used to examine the relationship between China’s ECIs and exports. We estimate both the static and dynamic gravity models where exports are a function of country size, transportation costs, and country-risk. Our results of static model suggest that that a 1 percent increase in China’s official ECI coverage stimulates its exports volume by 0.34 percent. Furthermore, Chinese companies export 1.5 times more to countries with ECIs than to those countries where ECIs are not available. Our estimates from the dynamic model are similar to the static model, to a lesser extent, of ECI impacts on exports to trading partners.