A NEW PERSPECTIVE ON CHINA TRADE GROWTH: APPLICATION OF A NEW INDEX OF BILATERAL TRADE INTENSITY

No 201025, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: This paper analyzes China’s trade relationships using a new trade intensity index, which incorporates gravity model estimation, to compare observed trade levels with levels would be expected to prevail given the economic, geographic, and cultural characteristics of the trading partners. The index is calculated to study China’s bilateral trade intensity, and uses Japan as a comparative case. Standard trade intensity index measures suggest China trades at a very intensive level with countries in East and Southeast Asia (ESA) and at a low level with countries in Europe (EU) and US-Canada (USC). The gravity model based index indicates that China’s level of trade with countries in the ESA region is consistent with levels that would be expected given the countries’ characteristics, while China’s level of trade with EU and USC are greater than one would expect given their characteristics. The new index also reveals insights regarding the evolution of China’s trade partners during the years 1988-2005. The paper’s results suggest the gravity model adjusted trade intensity index can provide a useful analytical tool for identifying strategic or other deviations in trade levels.

Keywords: Gravity model; Trade Intensity Index; Bilateral Trade; China (search for similar items in EconPapers)
JEL-codes: C43 F13 F14 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2010-12-12
New Economics Papers: this item is included in nep-cse, nep-int, nep-sea and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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