Impact of Currency Digitalization on Potential and Efficiency of China's Cross-Border Goods Trade

The development of central bank digital Currencies （CBDCs）, as digital forms of legal tender, creates new opportunities for cross-border goods trade. Using panel data of China's bilateral trade with 54 countries from 2014 to 2022, this paper employs a stochastic frontier gravity model to estimate trade efficiency and investigate the impact of CBDC development in trading partner countries on China's cross-border goods trade. This research findings are shown as below: China's bilateral goods trade efficiency is generally low overall, with substantial variation among trading partners, indicating significant untapped potential for improvement; CBDC development in trading partner countries significantly influenced China's cross-border goods trade, and this conclusion remains robust after replacing core explanatory variables, excluding specific samples, and testing for endogeneity; the development of CBDCs in trading partner countries exerts a more pronounced impact on China's goods imports and its trades with developing countries; CBDCs in trading partner countries can promote the development of China's cross-border trade by reducing trade costs. Accordingly, China should establish a multilateral CBDC cross-border payment network based on the CIPS system; adopt differentiated strategies according to the development stages of CBDCs in trading countries; deepen bilateral cooperation with developing countries; and promote the high-quality development of China's cross-border goods trade.