Research on the Export Potential of China’s New Energy Vehicles to the EU: Evidence from the Deepening of Environmental Provisions in RTAs

This study measures the export potential of China’s new energy vehicles (NEVs) to 27 European Union (EU) members from 2017 to 2023, and empirically examines the impact of the deepening of environmental provisions in the EU RTAs on the export efficiency. The results demonstrate that the export potential of China's NEVs has not been fully reached. The main reasons lie in the excessively detailed environmental provisions in the EU RTAs, import tariffs, technology, and institutional distances. Even so, the export efficiency of China's NEVs to the EU has increased from 0.87 in 2017 to 0.94 in 2023, mainly due to the improvement of infrastructure represented by liner shipping in the EU, and the narrowing of the technology and institution gaps between China and the EU members. Mechanism tests reveal that the deepening of environmental provisions in RTAs would reduce export efficiency by increasing production costs and compliance costs of enterprises, but also enhance export efficiency by stimulating innovation. However, the cost-restraining effect outweighs the innovation-stimulating effect. China needs to introduce environmental provisions in more RTAs, increase the number of environmental issues, enhance the enforceability of environmental provisions to further improve the export efficiency of China's NEVs in the future.