China’s OFDI and trade in belt and road countries: evidence of asymmetric spatial spillovers

Evidence on how China’s outward foreign direct investment (OFDI) affects trade flows and generatesspatial spillovers among Belt and Road Initiative (BRI) countries remains scarce. Using panel data for 47 BRI countries over 2010–2021, this study estimates a spatial Durbin model (SDM) to decompose the direct and indirect (spillover) effects of China’s OFDI stock on host-country imports and exports, employing an economic-distance-based spatial weights matrix. The results show that a 1% increase in China’s OFDI stock is associated with a 0.005% rise in host-country imports (p < 0.05) and a 0.034% increase in exports (p < 0.10). Moreover, spatial spillovers are asymmetric: neighbouring countries experience a 0.044% increase in imports (p < 0.01) but a 0.304% decline in exports (p < 0.05). These findings suggest that assessments of trade gains from Chinese capital inflows in BRI countries must account for cross-border linkages and the potential for regional redistribution of export opportunities.