Cross‐Border E‐Commerce and the Reduction of Import Trade Costs: Evidence From Linguistic Dimensions

ABSTRACT This paper investigates the causal impact of Cross‐Border E‐commerce (CBEC) on China's import trade costs, focusing on the mitigation of non‐geographic barriers. We first quantify China's bilateral trade costs using a structural trade‐cost measurement framework. To establish causality, we employ a Difference‐in‐Differences (DID) model with a novel, industry‐level identification strategy based on the official ‘CBEC Retail Import Commodity List’. Results show that the CBEC policy significantly lowers overall import trade costs. Furthermore, by constructing a detailed Linguistic Barrier Index, we find that the negative impact of linguistic barriers substantially diminishes under the CBEC model, enabling freer trade despite language differences. We also note the persistent role of English as a trade lingua franca. These findings offer a novel identification strategy and hold important implications for CBEC enterprises seeking strategic localisation in multilingual markets. JEL Classification: F14, Z13