Performance Gains and Risk Exposure Under the Belt and Road Initiative: Evidence from Chinese Trading Firms

Despite the scale of the Belt and Road Initiative (BRI), it remains unclear whether participation yields measurable financial benefits for the firms involved, especially for trading enterprises, which are central to the initiative yet remain underexamined in firm-level research. This paper investigates how BRI participation affects the financial performance of Chinese A-share listed trading firms and whether the same participation exposes them to greater operating risk. To identify treatment from a firm’s inclusion in the Belt and Road concept sector, we apply a difference-in-differences design to firm-level data spanning 2008 to 2024. The evidence shows that participation significantly increases firm value, measured by Tobin’s Q. This conclusion is robust to alternative performance measures, propensity score matching, and a heterogeneity-robust imputation estimator, and the parallel-trend and placebo tests support causal reading. Four channels carry the effect: expanded trade-credit financing, a larger share of overseas income, gains in total factor productivity, and a lower ratio of administrative and selling expenses. The benefits are concentrated rather than universal, accruing chiefly to mature, eastern, non-state-owned, and larger firms. Setting against these gains, however, participation also increases operating risk; thus, the initiative lifts average performance while leaving participating firms more exposed to earnings volatility. These results offer direct firm-level evidence on the microeconomic consequences of the BRI and point to concrete implications for firms and policymakers seeking to make participation both profitable and sustainable.