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China proposed the Belt and Road Initiative (BRI), an unprecedented development strategy in terms of scope and scale, to increase the connectivity with the rest of the world by infrastructure development and trade activities. Recently, more attention has been directed to the environmental implications of the international trade activities under this initiative, which contributes to the development of a green, i.e. environmentally friendly, partnership. This study examines the evolution of virtual water trade in relation to agricultural products between China and BRI countries during 2000-2016. The Logarithmic Mean Divisia Index (LMDI) method is adopted for uncovering the driving factors underlying the trade imbalance, as well as the major virtual water exports. Results reveal that China has experienced the shift from a net virtual water exporter to a net importer. At the regional level, Southeastern Asia and Southern Asia are the major net virtual water exporters to China, and Eastern Asia is the major importer. For the selected export countries, an increase in proportion of trade in relation to domestic production significantly contributes to their virtual water export, while water intensity could decrease virtual water export for most export countries. As for the driving forces behind the imbalance of virtual water trade, trade structure was an obvious positive effect, while the effects of water intensity, product structure, and trade scale shifted in favor of virtual water outflows from BRI countries to China in 2008. Massive global water loss has incurred, indicating the inefficiency of this partnership in relation to freshwater. A closer trade relationship is established between China and BRI countries, and relevant environment implications are identified. Policy implications are proposed in terms of trade structure, relationship of trade and domestic production, and international cooperation. This study provides valuable insights into the equity and sustainability of historic trade activities with respect to freshwater resources.

Driving Factors of Agricultural Virtual Water Trade between China and the Belt and Road Countries