The effect of CHINA RAILWAY Express on alleviating the Red Sea Waterway Crisis: A GTAP model-based study

Abstract

In November 2023, the Red Sea Waterway Crisis broke out, which caused the goods originally shipped to Europe via the Red Sea-Suez Canal Route to be transported around the Cape of Good Hope in Africa, thus increasing the shipping cost and shipping time. Firstly, this paper uses the Supply Chain Network Model and the Optimization Model to theoretically analyze the impact of this incident. Secondly, the Global Trade Analysis Project (GTAP) Model is employed to analyze the impact of the crisis on China. At the same time, it also explains whether the impact of the incident can be alleviated by using CHINA RAILWAY Express (CR Express). Finally, this paper compares the upward pressure changes of domestic commodity prices in China, Germany, France, Netherlands and Italy before and after the adoption of CR Express. The results of the study are as follows. (1) The outbreak of the Red Sea Waterway Crisis has a great negative impact on China's macro economy. When China switches to the use of CR Express, the impact on China's GDP and terms of trade is reduced. (2) The outbreak of the Red Sea Waterway Crisis has a greater impact on China's import trade than on its export trade. (3) The outbreak of the Red Sea Waterway Crisis has a great negative impact on China's textile and clothing industry and electronic equipment industry. (4) CR Express can ease the upward pressure of domestic commodity prices. Taken together, the above results can provide reference for China and other countries to cope with similar impact events.