Measurement of the Service Trade Cost Between China and RCEP Countries and Its Impact on Global Value Chains

This article measures the trade cost in services between China and Regional Comprehensive Partnership Agreement (RCEP) countries from 2005 to 2021 using the Novy gravity model and analyses the impact of services trade costs on the participation of RCEP countries using a two-way fixed-effects model. The results show that bilateral service costs show a downward trend, but the external effects of service costs are quite significant. The impact of services trade costs on the global value chain (GVCs) is negative, suggesting that reducing services trade costs can facilitate countries’ participation in GVCs. The impact of various factors on GVC participation (GVCPAR) is also markedly heterogeneous across countries. Based on the conclusions of the research results, three recommendations are finally put forward to provide some support for RCEP countries to reduce the cost of trade in services and increase the participation in GVCs. JEL Codes: F14, F13, F60