Trade Creation or Diversion?—Evidence from China’s Forest Wood Product Trade
Round 1
Reviewer 1 Report
Comments and Suggestions for AuthorsThe article deals with the analysis of the flows of wood materials at the commandeering of China. The period of study is taken as 2000-2019.
Abstract
Abstract for reconstruction Unfortunately, it does not include research methods and unified conclusions with the value of changes as a result of the FTA.
Keywords
Too extensive keywords, Recommended ordering" forest products, wood products, wood market, trade
Introduction
An assessment of the introduction of free trade agreements on the development of production and import and export of products in China is presented.
The assumptions and purpose of the ongoing research are presented.
Literature review
A broad review of the literature for the studied scope of the subject of trade in wood and wood products was conducted.
The n RESEARCH ON THE IMPACT OF THE FREE TRADE AND FREE MARKET ON CHANGES IN WOOD AND LUMBER PRODUCTION was pointed out.
The lack of justification of price wars in stabilizing world trade was pointed out. The level of growth of bilateral agreements in free trade was assessed. The level of welfare growth in statistical surveys with the impact of trade rules was determined.
Materials
An assessment of trade rules for 40 countries was made, taking into account forest products
The impact of agreements on the development of trade and trade networks was analyzed.
A description of the gravity model of trade in forest goods was made. The research area was indicated, separating the different variables.
Empirical analyses were made for the example studied.
Statistical analyses were presented logically and in an orderly manner.
Conclusions
The close relationship of trade market liberalization and international agreements to the growth of trade in timber and its products was pointed out. An integrated supply chain for forest products was properly evaluated.
Literature selected correctly
Author Response
Dear Referee,
Thank you again for the kind consideration of our paper, we will be more careful in our future writing. Please find our response below.
1.Abstract for reconstruction Unfortunately, it does not include research methods and unified conclusions with the value of changes as a result of the FTA.
Response 1: Thanks for your advice. We have rewritten the abstract of the article. The main contents are shown in page 1, lines 11-26 as follows:
“Abstract: In recent years, trade protectionism and unilateralism have prevailed, and countries around the world have imposed restrictions on log exports. It has also become more difficult for China to import wood resources and export deep-processed wood forest products. Based on panel data from 2000 to 2019, this study uses social network analysis to measure the level of Chinese wood forest products’ trade network, takes the Chinese free trade agreements (FTAs) as the natural experiment, and uses the multi-stage double difference method to investigate the impact of the signed FTA on China’s wood forest products trade. The study finds that the trade network of Chinese wood forest products is becoming increasingly complex, and the central position of China and the Association of Southeast Asian Nations (ASEAN) in the network is increasing year by year. The signing of FTA has had a significant positive impact on the trade of wood forest products in China and a significant trade creation effect. This finding remains true after conducting the placebo test and propensity score matched regression control. At the same time, the import of wood forest products in China will have a significant trade transfer effect due to the signing of FTA, and this will not affect exports. Although FTA shows significant trade creation and trade transfer effect in China’s wood forest products trade, it also increases to a certain extent the mismatch of forest resources worldwide.”
2.Too extensive keywords, Recommended ordering" forest products, wood products, wood market, trade.
Response 2: Thanks for your advice. We have rewritten the keywords of the article. The main contents are shown in page 1, line 26 as follows:
“forest products; wood products; wood market; FTA; trade”
Author Response File: 
Author Response.docx
Reviewer 2 Report
Comments and Suggestions for AuthorsThe manuscript covers an analysis of China’s forest wood products with free trade agreements.
First of all, authors should give more about "why this topic is important" detail in the first part of the abstract. An effective abstract is crucial for maximizing the impact and readership of your paper. It should encompass background information, research questions, and a structured overview of the purpose, methodology, results, and implications.
In the abstract please give the meaning of ASEAN. The audience should not search for such details in the eraly parts of the manuscript.
Next, introduction is weak in explaning the whole manuscript. In crafting a comprehensive introduction, several key elements should be strategically woven together. First, provide background information to contextualize your research within the existing literature. Next, articulate the motivation behind your study—why it matters and what gaps or unresolved questions it aims to address. Subsequently, outline the purpose of your research, clearly stating its objectives and scope. Additionally, elucidate the rationale for selecting a specific methodology, emphasizing its advantages over alternative approaches. Briefly summarize your findings, offering a glimpse into the results you’ve obtained. Finally, underscore the contributions of your work, emphasizing its novelty and significance within the field. This multifaceted introduction serves as a critical foundation for engaging readers and setting the stage for the rest of your paper.
Literature Review is ok. A well-structured literature review is essential for any scholarly work. It serves as the foundation for understanding existing research and identifying gaps in knowledge. However, to enhance its impact, consider supplementing your literature review with a summarizing table. Such a table can succinctly present key findings, methodologies, and relevant details from various studies. By doing so, you provide readers with a visual overview, making it easier for them to grasp the essential points. Additionally, summary tables have the potential to increase the visibility of your paper. Researchers often appreciate concise, actionable information, and a well-designed table can serve as a quick reference guide. Consequently, papers that include these informative tables may attract more citations, as they offer valuable insights in a convenient format. Remember that clarity and accessibility are crucial when creating such tables, ensuring that they effectively convey the essential information to your audience.
In the 3.1. Materials section, why you have selected that 40 countries ? Please give some more evidences to support your study inputs.
Please explain Figure 1. China’s forest wood products trade network in 2000, 2010, and 2019. It is really hard to read the figure.
The other statistical tests are all ok.
Before 6. Conclusion and Implications section, authors should give a Discussion. In the discussion, give interpretation of results discuss the significance of your findings in relation to your research question or hypothesis. Explain how your results contribute to the existing body of knowledge and whether they align with or challenge previous studies. Provide a comparative analysis with the existing literature.
Finally, in the conclusion, please present theoretical contributions, originality of the research, limitations and further research ideas at the final paragraphs.
Author Response
Dear Referee,
Thank you again for the kind consideration of our paper, we will be more careful in our future writing. Please find our response below.
1.Authors should give more about "why this topic is important" detail in the first part of the abstract. An effective abstract is crucial for maximizing the impact and readership of your paper. It should encompass background information, research questions, and a structured overview of the purpose, methodology, results, and implications.
Response 1: Thanks for your advice. We have rewritten the abstract of the article. The main contents are shown in page 1, lines 11-26 as follows:
“Abstract: In recent years, trade protectionism and unilateralism have prevailed, and countries around the world have imposed restrictions on log exports. It has also become more difficult for China to import wood resources and export deep-processed wood forest products. Based on panel data from 2000 to 2019, this study uses social network analysis to measure the level of Chinese wood forest products’ trade network, takes the Chinese free trade agreements (FTAs) as the natural experiment, and uses the multi-stage double difference method to investigate the impact of the signed FTA on China’s wood forest products trade. The study finds that the trade network of Chinese wood forest products is becoming increasingly complex, and the central position of China and the Association of Southeast Asian Nations (ASEAN) in the network is increasing year by year. The signing of FTA has had a significant positive impact on the trade of wood forest products in China and a significant trade creation effect. This finding remains true after conducting the placebo test and propensity score matched regression control. At the same time, the import of wood forest products in China will have a significant trade transfer effect due to the signing of FTA, and this will not affect exports. Although FTA shows significant trade creation and trade transfer effect in China’s wood forest products trade, it also increases to a certain extent the mismatch of forest resources worldwide.”
2.Literature Review is ok. A well-structured literature review is essential for any scholarly work. It serves as the foundation for understanding existing research and identifying gaps in knowledge. However, to enhance its impact, consider supplementing your literature review with a summarizing table. Such a table can succinctly present key findings, methodologies, and relevant details from various studies. By doing so, you provide readers with a visual overview, making it easier for them to grasp the essential points. Additionally, summary tables have the potential to increase the visibility of your paper. Researchers often appreciate concise, actionable information, and a well-designed table can serve as a quick reference guide. Consequently, papers that include these informative tables may attract more citations, as they offer valuable insights in a convenient format. Remember that clarity and accessibility are crucial when creating such tables, ensuring that they effectively convey the essential information to your audience.
Response 2: Thanks for your comments. We have added a literature list. The main contents are shown in page 4, line 197 as follows:
|
Main research field |
Main research content |
Author(s) |
|
Forest Wood Products Trade |
Research on the competitiveness and complementary of forest product trade among different countries. |
Su et al. [13]; Evgeniy [14]; Long et al. [15] |
|
Research on the impact of policy shocks on forest wood product trade. |
Buongiomo [16]; Jiao et al. [17]; Stenberg and Siriwardana [18]; Zhang et al. [19]; Prestemon [20]; Van Kooten et al. [21]; Chang and Gaston [22]; Zhang et al. [23] |
|
|
Research on the impact of factors such as exchange rates and trade facilitation on forest product trade. |
Baek [24]; Zhang et al. [25] |
|
|
Free Trade Agreements (FTAs) |
Research on the impact of FTAs on the economy. |
Kemp [26]; DeRosa [27]; Lewis et al. [28]; Suthiphand [29]; Hertel et al. [30]; John and Thomas [31]; Siriwardana [32]; Guilhot [33]; Lee and Don [34]; Jayasinghe and Sarker [35]; Herath [36]; Mujahid and Kalkuhl [37]; Jin et al. [38]; Okabe and Urata [39]; Pfaermayr [40]; Darma and Hastiadi [41] |
|
Research on China's FTAs. |
Huang and Liu [42]; Wang et al. [43]; Xi and Chen [44]; Yuan and Tian [45]; Cao et al. [46]; Hu [47]; Li and Yu [48]; Zhang et al. [49]; Cheng and Feng [50] |
3.In the 3.1. Materials section, why you have selected that 40 countries ? Please give some more evidences to support your study inputs.
Response 3: Thanks for your comments. The main reason we chose these 40 countries is that they are the 40 countries with the highest trade volume of forest wood products with China in 2019. Taking 2019 as an example, a total of 215 countries (regions) engaged in trade of forest wood products with China, amounting to a trade volume of $102.68 billion, of which the trade with these 40 countries accounted for 86.48%. In 2000 and 2010, the figures were 80.93% and 86.26% respectively, indicating that the trade relationship between these countries and China is not only important but also stable. Finally, we looked at the geographic distribution of these countries and found that they were distributed on every continent except Antarctica, covering a wide area. Therefore, we believe that these 40 countries are very representative and can largely reflect the pattern of China's forest wood products trade.
We have revised the relevant content of the article. The main contents are shown in page 4, lines 189-198 as follows:
“We select 40 countries that exhibit the highest value of forest wood product trade with China from 2000 to 2019 (Table 1). Taking 2019 as an example, a total of 215 countries (re-gions) engaged in trade of forest wood products with China, amounting to a trade volume of $102.68 billion, of which the trade with these 40 countries accounted for 86.48%. In 2000 and 2010, the figures were 80.93% and 86.26% respectively, indicating that the trade relationship between these countries and China is not only important but also stable. Finally, we examined the geographic distribution of these countries and found that they were dis-tributed on every continent except Antarctica, covering a wide area. Therefore, we believe that these 40 countries are very representative and can largely reflect the pattern of China's forest wood products trade.”
4.Please explain Figure 1. China’s forest wood products trade network in 2000, 2010, and 2019. It is really hard to read the figure.
Response 4: Thanks for your comments. According to your suggestion, we have added an explanation about Figure 1 in the "4. Trade Network Analysis" section. The main content is shown on page 7, line 238, as follows:
“To illustrate the changes in China’s forest wood product trade network more intuitively, we used forest product trade data to create a trade network map using NetDraw software (Figure 1). According to Figure 1, the complexity of China’s wooden forest product trade network is increasing annually, and the changes in thick black lines in the figure indicate major changes in the relationship structure between the major trading countries, which leaned toward FTA signatories.”
5.Before 6. Conclusion and Implications section, authors should give a Discussion. In the discussion, give interpretation of results discuss the significance of your findings in relation to your research question or hypothesis. Explain how your results contribute to the existing body of knowledge and whether they align with or challenge previous studies. Provide a comparative analysis with the existing literature.
Response 5: Thanks for your comments. According to your suggestion. We have rewritten the "Conclusion" and "Discussion" based on your suggestions. The main content is shown on page 15, lines 430-469, as follows:
“6. Discussion Applying quasi-natural experiments of FTA signings, this study uses a staggered DID approach to investigate the influence of FTA signing on China’s forest wood product trade, measuring the effect from three levels of total trade, export, and import. Parallel Trend Test in Figure 2 indicates no substantial disparity in the change trend of total trade value or export and import values of forest wood products between the treatment and control group prior to policy implementation. However, following subsequent FTA signings, the regression coefficient of the difference variable between export and import of forest wood products shows a significant upward trend, indicating that FTA-induced trade creation effects have certain long-term stability.
The findings presented in Table 8 demonstrate that the institutionalization of trade liberalization commitments led to the elimination of trade barriers among member states and effectively prevented the establishment of new barriers. This reduction in trade policy uncertainty had a significantly positive impact on China's trade in forest wood products. Moreover, compared to export, FTAs exerted a stronger influence on China's import of forest wood products. And we also found that every 1% increase in GDP of China or its trading partner country, China’s total trade in forest wood products will increase by 0.59%, and population size also has a significant promotional effect at both ends of the import and export of forest wood products. In addition, we found that for China, because the trade of forest wood products is mainly processing trade, there is a large demand for imports of upstream products of the industrial chain such as timber and sawnwood. Therefore, China has more trade with countries rich in forest resources. On the other hand, countries rich in forest resources may have a stronger preference for forest wood products. There is also a greater demand for forest wood products with consumption stickiness, which further strengthens their trade in forest wood products with China. Through the placebo test and robustness test, we found that our research conclusion still holds.
Finally, we analyzed the trade diversion effect of FTA. Notably, our results seem to differ from the findings of existing studies [40,41]. To analyze whether a trade diversion effect occurs after signing FTAs in China more accurately, we conduct subsample regression. Given that China has only entered into FTAs with countries in Asia, Oceania, and South America within the sample, we perform a heterogeneity analysis focusing on these three continents exclusively. The results demonstrate that FTAs signed by China in Asia had a significant trade diversion effect at the import side, showing that after signing FTAs with ASEAN and South Korea, the amount of forest wood products imported by Asian countries that never signed FTAs decreased significantly. In other words, China is more inclined to import raw materials such as timber and sawnwood from FTA members in Asia. The results in Figure 4 also show that China’s forest wood products exports to Brazil and Uruguay increased significantly after it signed an FTA with Chile.”
6.Finally, in the conclusion, please present theoretical contributions, originality of the research, limitations and further research ideas at the final paragraphs.
Response 6: Thanks for your comments. According to your suggestion.
We have added the innovative points of this study in the "1. Introduction" section. The main content is shown on page 2, lines 76-84, as follows:
“There are three major innovations in this paper: (a) Employing the social network analysis method, we meticulously examine the global trade patterns of forest wood products with a specific focus on China’s evolution. (b) Unlike previous studies that have predominantly examined the trade effect of FTAs within the general equilibrium framework, we use a staggered difference-in-differences (DID) model to explore the trade creation and trade diversion effects of FTAs on China’s forest wood product trade. (c) By conducting heterogeneity analysis, our study further elucidates the trade diversion effects of FTAs on China’s forest wood product trade and proposes valuable countermeasures for developing the global forest wood product industry.”
We added the shortcomings and prospects of the research in the last paragraph of the article.. The main content is shown on page 17, lines 544-549, as follows:
“Still, many relevant questions remain beyond our current reach. For example, limited to sample data, our focus is primarily on China's FTA and the trade of forest wood products with its member countries, while neglecting other nations worldwide. Furthermore, our research takes a macroscopic perspective and lacks sufficient analysis on segmented products. In future studies, we will delve into the trade effect of specific FTA clauses at a product level to provide micro-evidence that better elucidates changes in the global trade pattern of forest wood products.”
Author Response File: Author Response.docx
Reviewer 3 Report
Comments and Suggestions for AuthorsFree trade is not new, why China? Can the results be generalised?
Shorten the title of the paper.
The authors said “We select 40 countries that exhibit the highest value of forest wood product trade 187 with China from 2000 to 2019 (Table 1).” What are the differences between countries?
As that is a 40 countries study, has PSM-DID run panel data? Please provide litetarure support. Table 5. Unit root test. Is this unit root or panel unit root? Some information about The role of energy prices and non-linear fiscal decentralization in limiting carbon emissions: tracking environmental sustainability, S Shan, M Ahmad, Z Tan, TS Adebayo, - Energy, 2021
The authors have to state the originality and research gaps that have been filled.
Figure 1 needs explanation about how to make them, what do these mean? To illustrate the changes 215
in China’s forest wood product trade network more intuitively, we use NetDraw software 216
to produce a map of the trade network (Figure 1) Based on which algorithm? Maths background?
State research questions in introduction and hypotheses before research method section.
What is the new point brought by equation 2?
Elaborate point centrality index with citation.
How does PSM-DID compare with other methods? What are the merits and limits?
State more details about PSM-DID and where has that been applied: Y Cao, Y Zhang, L Yang, MJC Crabbe, Green credit policy and maturity mismatch risk in polluting and non-polluting companies - Sustainability, 2021
Raise resolution of Figure 4.
Add discussion section.
Add citation for Table 4. Descriptive statistics.
The results section should be separated from research method section.
Add hypotheses.
Comments on the Quality of English Language
Polish English
Author Response
Dear Referee,
Thank you again for the kind consideration of our paper, we will be more careful in our future writing. Please find our response below. The original comments are printed in black and are followed by our response in blue.
1.Free trade is not new, why China? Can the results be generalized?
Response 1: Thanks for your comments. As you said, free trade is not new, but in the past, the research on free trade was more based on the multilateral trade mechanism under the WTO framework, mainly studying tariff reduction. With the development of free trade and the rise of trade protectionism in recent years, FTAs has emerged and become an important form of multilateral cooperation. FTAs not only contains relevant provisions for tariff reduction, but also makes great progress in breaking down non-tariff barriers. Therefore, this study is based on FTAs signing as a natural experiment, which is different from previous trade liberalization studies which mainly focus on tariff reduction.
The reason why this paper focuses on China is that China is the world's largest producer, trader and consumer of forest wood products. In 2019, China accounted for 12.20% of the world's total trade in forest wood products, of which exports accounted for 13.32% and imports accounted for 11.11%. The examination of factors influencing the fluctuations in terms of trade for major economies will enhance our comprehension of the underlying causes behind shifts in the global trade patterns of forest wood products. Due to the large differences in economic size and trade policies implemented among countries, the results of the study are difficult to generalize.
2.Shorten the title of the paper.
Response 2: Thanks for your advice. The title has been revised to "Trade Creation and Diversion: An Empirical Analysis of China’s Forest Wood Products and FTAs"
3.The authors said “We select 40 countries that exhibit the highest value of forest wood product trade with China from 2000 to 2019 (Table 1).” What are the differences between countries?
Response 3: Thanks for your comments. The main reason we chose these 40 countries is that they are the 40 countries with the highest trade volume of forest wood products with China in 2019. Taking 2019 as an example, a total of 215 countries (regions) engaged in trade of forest wood products with China, amounting to a trade volume of $102.68 billion, of which the trade with these 40 countries accounted for 86.48%. In 2000 and 2010, the figures were 80.93% and 86.26% respectively, indicating that the trade relationship between these countries and China is not only important but also stable. Finally, we looked at the geographic distribution of these countries and found that they were distributed on every continent except Antarctica, covering a wide area. Therefore, we believe that these 40 countries are very representative and can largely reflect the pattern of China's forest wood products trade.
We have revised the relevant content of the article. The main contents are shown in page 4, lines 189-198 as follows:
“We select 40 countries that exhibit the highest value of forest wood product trade with China from 2000 to 2019 (Table 1). Taking 2019 as an example, a total of 215 countries (re-gions) engaged in trade of forest wood products with China, amounting to a trade volume of $102.68 billion, of which the trade with these 40 countries accounted for 86.48%. In 2000 and 2010, the figures were 80.93% and 86.26% respectively, indicating that the trade relationship between these countries and China is not only important but also stable. Finally, we examined the geographic distribution of these countries and found that they were dis-tributed on every continent except Antarctica, covering a wide area. Therefore, we believe that these 40 countries are very representative and can largely reflect the pattern of China's forest wood products trade.”
- As that is a 40 countries study, has PSM-DID run panel data? Please provide literature support. Table 5. Unit root test. Is this unit root or panel unit root?
Response 4: Thanks for your comments. We have benefited a lot from the literature you recommended. We have further supplemented the references according to your suggestions. As you said, this is a panel data. We use DID method for benchmark analysis and PSM-DID method for robustness test. Table 5. is panel unit root test. For further clarity, we have revised the relevant parts of the article. The main contents are shown in page 8, lines 279 as follows:
“We use short panel data used in this study; thus, we reference Harris and Tzavalis’s approach to test the panel unit root. Table 5 presents the results of the HT test.”
According to your suggestions, we have added relevant references as follows:
- Shan, S.; Ahmad, M.; Tan, Z.; Adebayo, T.S.; Li, R.Y.M.; Kirikkaleli, D. The role of energy prices and non-linear fiscal decentralization in limiting carbon emissions: tracking environmental sustainability. Energy2021, 234, 121243.
5.Figure 1 needs explanation about how to make them, what do these mean?
Response 5: Thanks for your comments. According to your suggestion, we have added an explanation about Figure 1 in the "4. Trade Network Analysis" section. The main content is shown on page 7, line 238, as follows:
“To illustrate the changes in China’s forest wood product trade network more intuitively, we used forest product trade data to create a trade network map using NetDraw software (Figure 1). According to Figure 1, the complexity of China’s wooden forest product trade network is increasing annually, and the changes in thick black lines in the figure indicate major changes in the relationship structure between the major trading countries, which leaned toward FTA signatories.”
6.State research questions in introduction and hypotheses before research method section.
Response 6: Thank you very much for your professional suggestions. According to your suggestion, we have stated research questions in introduction and hypothesis before research method section. The main contents are shown in page 8, lines 279 as follows:
“Among the countries listed in Table 2, Chile entered into an FTA with China in 2005, followed by New Zealand in 2008, Singapore in 2009, ASEAN in 2010, and Australia and South Korea in 2015. Based on the stylized facts presented in Figure 1, it is evident that the signing of FTAs has significantly bolstered the trade relationship between China and its member countries concerning forest wood products. Consequently, we propose the following hypothesis:
Hypothesis
FTAs signings generate trade creation effect on China's forest wood products trade.”
7.Elaborate point centrality index with citation.
Response 7: Thanks for your comments. According to your suggestion, we have added an explanation about point centrality in the "4. Trade Network Analysis" section. The main content is shown on page 6, line 224, as follows:
“Point centrality is used to measure the trading ability of the subject in the network. If an entity is directly connected to many other entities, the measurement value will be higher, and we believe that the entity has a higher degree of centrality.”
8.How does PSM-DID compare with other methods? What are the merits and limits? State more details about PSM-DID and where has that been applied.
Response 8: Thanks for your comments. We have benefited a lot from the literature you recommended. According to your suggestions, we have further supplemented the references and added the method introduction on PSM-DID. The main contents are shown in page 12, lines 369-374 as follows:
“The DID methodology has the demerit of selection bias in policy evaluation and conventional PSM might ignore individual heterogeneity, PSM-DID uniquely offers the advantage of accounting for the heterogeneity intrinsic to different countries, and overcome the demerits of selection biases between treatment and control countries. This study will provide a more compelling establishment of a causal relationship between FTAs and China’s forest wood products trade via PSM-DID.”
According to your suggestions, we have added relevant references as follows:
- Cao, Y.; Zhang, Y.; Yang, L.; Li, R.Y.M.; Crabbe, M.J.C. Green credit policy and maturity mismatch risk in polluting and non-polluting companies. Sustainability2021, 13, 3615.
- Ghimire, A.; Ali, S.; Long, X.; Chen, L.; Sun, J. Effect of Digital Silk Road and innovation heterogeneity on digital economy growth across 29 countries: New evidence from PSM-DID. Technol Forecast Soc2024, 198, 122987.
9.Raise resolution of Figure 4.
Response 9: We appreciate your comments. We have replaced Figure 4 with higher resolution.
10.Add discussion section.
Response 10: Thanks for your advice. We added discussion section after section 5. The main contents are shown in page 8, lines 275-277 as follows:
“Applying quasi-natural experiments of FTA signings, this study uses a staggered DID approach to investigate the influence of FTA signing on China’s forest wood product trade, measuring the effect from three levels of total trade, export, and import. Parallel Trend Test in Figure 2 indicates no substantial disparity in the change trend of total trade value or export and import values of forest wood products between the treatment and control group prior to policy implementation. However, following subsequent FTA signings, the regression coefficient of the difference variable between export and import of forest wood products shows a significant upward trend, indicating that FTA-induced trade creation effects have certain long-term stability.
The findings presented in Table 8 demonstrate that the institutionalization of trade liberalization commitments led to the elimination of trade barriers among member states and effectively prevented the establishment of new barriers. This reduction in trade policy uncertainty had a significantly positive impact on China's trade in forest wood products. Moreover, compared to export, FTAs exerted a stronger influence on China's import of forest wood products. And we also found that every 1% increase in GDP of China or its trading partner country, China’s total trade in forest wood products will increase by 0.59%, and population size also has a significant promotional effect at both ends of the import and export of forest wood products. In addition, we found that for China, because the trade of forest wood products is mainly processing trade, there is a large demand for imports of upstream products of the industrial chain such as timber and sawnwood. Therefore, China has more trade with countries rich in forest resources. On the other hand, countries rich in forest resources may have a stronger preference for forest wood products. There is also a greater demand for forest wood products with consumption stickiness, which further strengthens their trade in forest wood products with China. Through the placebo test and robustness test, we found that our research conclusion still holds.
Finally, we analyzed the trade diversion effect of FTA. Notably, our results seem to differ from the findings of existing studies [40,41]. To analyze whether a trade diversion effect occurs after signing FTAs in China more accurately, we conduct subsample regression. Given that China has only entered into FTAs with countries in Asia, Oceania, and South America within the sample, we perform a heterogeneity analysis focusing on these three continents exclusively. The results demonstrate that FTAs signed by China in Asia had a significant trade diversion effect at the import side, showing that after signing FTAs with ASEAN and South Korea, the amount of forest wood products imported by Asian countries that never signed FTAs decreased significantly. In other words, China is more inclined to import raw materials such as timber and sawnwood from FTA members in Asia. The results in Figure 4 also show that China’s forest wood products exports to Brazil and Uruguay increased significantly after it signed an FTA with Chile.
Figure 4. Analysis of trade diversion effect based on heterogeneity (export on the left, import on the right).”
11.Add citation for Table 4. Descriptive statistics.
Response 11: Thanks for your advice. We have added citation for Table 4. The main contents are shown in page 8, lines 275-277 as follows:
“Table 4 presents the descriptive statistics for the variables. Notably, out of the 800 samples, 14.7% are observations after signing an FTA with China.”
12.The results section should be separated from research method section.
Response 12: Thanks for your professional suggestions. We added discussion section after section 5 to separate results section from research method section. The main contents are shown in comment 11th.
13.Add hypotheses.
Response 13: Thanks for your advice. we have stated hypothesis before Section 5. The main contents are shown in page 8, lines 279 as follows:
“Among the countries listed in Table 2, Chile entered into an FTA with China in 2005, followed by New Zealand in 2008, Singapore in 2009, ASEAN in 2010, and Australia and South Korea in 2015. Based on the stylized facts presented in Figure 1, it is evident that the signing of FTAs has significantly bolstered the trade relationship between China and its member countries concerning forest wood products. Consequently, we propose the following hypothesis:
Hypothesis
FTAs signings generate trade creation effect on China's forest wood products trade.”
Author Response File: Author Response.docx
Round 2
Reviewer 2 Report
Comments and Suggestions for AuthorsThe all required adjustments are fulfilled.
Author Response
Dear Professor,
Thank you very much for your valuable feedback on our paper. Your suggestions have greatly helped improve the quality of our paper.
Sincerely wish you all the best.
Reviewer 3 Report
Comments and Suggestions for AuthorsThe title has to be more attractive.
Please extend to more recent data to 2023. Else, explain why that only stops in earlier time frame with strong reason.
The current results can also be used as a robustness check for the variables.
Literature on FTAs , please use full name.
Some paragraphs are too long and should be broken to two.
Table 1. Literature list. Please classify the research instead of one big category.
Why 40 countries?
What is HS classification system?
232-239 needs more details, what are those figures, colors etc.
State what research has used benchmark regression: Robot application and occupational injuries: are robots necessarily safer? S Yang, et al Safety science, 2022. The authors should also state what is benchmark regression, how does that compare to other modelling and limitations.
And the words inside the figures are unclear.
Reasons for the variables are needed. Descriptive stat table needs data source.
Add discussion section.
Chinese references like Henan Social Sciences should be removed.
Discuss the limitation of the paper.
Comments on the Quality of English Language
Polish English.
Author Response
Dear Professor
Thank you for your suggestions for revising our paper. These suggestions are very helpful in improving the quality of our paper. We marked the modified areas in red font in the paper.
According to your suggestions, we have made revisions to the paper, as follows:
Suggestion 1：The title has to be more attractive.
According to your suggestion, we have changed the original title "Trade Creation and Diversion: An Empirical Analysis of China’s Forest Wood Products and FTAs" to "Trade Creation or Diversion？—Evidence from China’s Forest Wood Products Trade".The specific location is in lines 2 to 3 of the article.
Suggestion 2：Explain why the data in the manuscript is dated up to 2019.
There are two main reasons why we use data up to 2019. First, the data of some countries will only be updated to 2022. Second, the global trade will be greatly affected by the COVID-19 epidemic. If we include data from 2020-2023 in the manuscript, it may lead to distorted test results. In summary, the deadline for the data we have chosen is 2019.
There are many international trade research papers that also use data up to 2019, such as:
- Peng Y,Yang B. Third-country Trade Effects of Digital Trade Rules in Regional Trade Agreements: Diversion or Spillover[J].Journal of International Trade,2023(01):36-54.
- Huang Y,Niu H, Li G. Research on the Effect of Agricultural Trade between China and ASEAN under the CAFTA Scenario[J].Journal of Agrotechnical Economics,2023(08):113-129.
- James F ,Andrew D . Non-tariff measures: a methodology for the quantification of bilateral trade effects of policy measures at a product level[J]. Applied Economics,2024,56(36).
Suggestion 3：Explain why 40 countries were chosen.
The main reason we chose these 40 countries is that they are the 40 countries with the highest trade volume of forest wood products with China in 2019. Taking 2019 as an example, a total of 215 countries (regions) engaged in trade of forest wood products with China, amounting to a trade volume of $102.68 billion, of which the trade with these 40 countries accounted for 86.48%. In 2000 and 2010, the figures were 80.93% and 86.26% respectively, indicating that the trade relationship between these countries and China is not only important but also stable. Finally, we looked at the geographic distribution of these countries and found that they were distributed on every continent except Antarctica, covering a wide area. Therefore, we believe that these 40 countries are very representative and can largely reflect the pattern of China's forest wood products trade.
The specific location is in lines 200 to 209 of the article.
Suggestion 4：What is HS classification system?
HS(The Harmonized Commodity Description and Coding System) refers to a multi-purpose international trade commodity classification catalog developed by coordinating multiple international commodity classification catalogs based on the World Customs Organization (formerly the Customs Cooperation Council) Commodity Classification Catalog and the International Trade Standard Classification Catalog. HS was officially implemented on January 1, 1988 and revised every four years. At present, more than 200 countries and regions in the world use HS, and over 90% of the global trade volume is classified according to HS [1-2].
[1] Zainuddin M, Sarmidi T, Khalid N. Sustainable Production, Non-Tariff Measures, and Trade Performance in RCEP Countries[J]. Sustainability,2020, 12, 9969.
[2] Saba I ,Shahid A . Static and dynamic RCA analysis of India and China in world economy[J]. International Studies of Economics,2022,17(2).
The following articles all adopt HS classification as the research content of the paper:
- Shang T,Yin Z.Research on Marginal Trade and Trade Growth of New Products between China and the "the Belt and Road" Region -- Analysis based on the nature of different trade sectors[J].Journal of International Trade,2018(03):67-84.
- Saba I ,Shahid A. Static and dynamic RCA analysis of India and China in world economy[J]. International Studies of Economics,2022,17(2).
- Yang J.RMB exchange rate and Sino US trade structure: an empirical study based on HS classification data[J].Inquiry into Economic Issues,2016(02):134-143.
Suggestion 5：Improve the clarity of images in the paper.
Following your suggestion, we have improved the clarity of all the images in the paper.
These images are located on lines 244, 336, 374, and 468 in the paper.
In addition to the above content, we have explained the colored icons in Figure 1. These images are located on lines 245.
Suggestion 6：Add discussion section.
Following your suggestion, we have added a discussion section to the paper. The newly added discussion section is in lines 428 to 467 of the paper.
Suggestion 7：Discuss the limitation of the paper.
Following your suggestion, we discussed the limitations of the article in the last paragraph of this paper. The newly added section is in lines 542 to 548 of the paper.
Suggestion 8：Explain the reasons for selecting variables.
The indicator selection for our paper is based on the gravity model. The relevant control variables are sourced from existing references[1-3].The above content can be found on lines 286 to 322 of the paper.
[1]Wang, J. The economic impact of special cconomic zones: evidence from Chinese municipalities. Journal of Development Economics 2013, 101(1), 133-147.
[2]Dai, M.; Shen, W. Trade flow and potentiality of China's timber-forest products: a gravity model. Resources Science 2010, 32(11), 2115-2122．
[3]Melitz, J.; Toubal, F. Native language, spoken language, translation and trade. Journal of International Economics 2014, 93(2), 351-363.
Suggestion 9：Clearly define the source of the data.
According to your suggestion, we have standardized the specific sources of data in the references. Their serial numbers are [52][53][54][55][56][57][58]. The above content can be found on lines 215 to 219 of the paper.
Author Response File: Author Response.docx
