A Study On The Influence Of Cultural Differences On Trade Between China And "The Belt And Road" Countries

International trade is an activity that realizes the cross-border mobility of commodities between economies with different cultural backgrounds.The nature of international commodity exchange is the transnational communication and exchange of national culture.In“the Belt and Road” countries,there are not only developed countries that are at the forefront of the world in all areas.There are also developing countries that are full of potential for rapid growth.There are less-developed countries with low per capita income.There is a large gap in economic development among “the Belt and Road” countries.At the same time,China faces huge cultural barriers when developing trade cooperation with countries along the route because of the large cultural barrier.Cultural differences are the differences in cognition presented by different countries in terms of thought,value,and action.They are prominently manifested in the differences in the way of thinking,values,and behaviour.With the rapid growth of economic globalization and regional integration,the impact of cultural differences on international trade has become more and more prominent.Historical and geographical elements accumulated in a long history often have to be passed on from generation to generation to influence modern economic activities.This article analyses the cultural differences of the countries along “the Belt and Road” from the aspects of influencing factors,main performances and metrics,and puts forward the explicit and implicit cultural differences of the countries along “the Belt and Road” by establishing the Mahalanobis distance regarding more than 80 countries and regions in the world.This article analyses the four influence mechanisms of cultural differences on international trade from the transaction costs on the supply side of trade and consumer behaviour on the demand side of trade.From the perspective of transaction costs on the supply side of trade,cultural differences affect international trade via communication barriers,information asymmetry,and trust distance mechanisms.The article analyses that,from the perspective of consumer behaviour on the trade demand,cultural differences affect international trade through the mechanism of cultural value differences.This article selects Common Official Language(COL),Direct Communication Ability Index(DC),Language Barrier Index(LBI),Overseas Chinese Network(OCN),Formal Trust Distance(Formaltrust),Informal Trust Distance(Informaltrust),Cultural Value Distance(VD)etc.as core explanatory variables.It applies panel data from China and countries along “the Belt and Road” to empirically analyse the effectiveness of cultural differences on the four influence mechanisms of trade between China and “the Belt and Road” countries.Finally,this article offers suggestions and measures such as realizing language exchanges,leveraging the advantages of overseas Chinese networks,strengthening trust relations between countries,and formulating cultural values and national trade policies,in order to promote continued and excellent trade cooperation between China and countries along “the Belt and Road”.This article aims to offer theoretical basis and policy reference for the quality development of foreign trade.It has been shown from the research that: First,due to the existence of communication barriers,cultural differences prove to be a huge hindrance to trade between China and “the Belt and Road” countries.The Direct Communication Ability Index has the greatest impact on China's trade with countries along the route.Next is the language barrier index and the common official language.The higher the degree of product differentiation,the greater the negative impact of language differences on bilateral trade.Among them,the trade of heterogeneous commodities is most affected by language differences,followed by homogeneous commodities with reference prices,and the least affected is homogeneous commodities with open trading venue prices.Second,due to the existence of influencing mechanism of information asymmetry,cultural differences significantly impede trade development between China and the "Belt and Road" countries.However,overseas Chinese networks can effectively overcome information barriers caused by cultural differences.Its information sharing effect,immigration preference effect,and dishonesty punishment effect have jointly promoted the high-quality development of trade between China and countries along the route.Third,due to the existence of the influence mechanism of trust distance,cultural differences have an obvious hindrance to the trade between China and “the Belt and Road” countries.Compared with formal trust,informal trust has a greater and more significant impact on China's trade with countries along the route.This means that the establishment of informal mutual trust between China and countries along “the Belt and Road” on a broader level will be more helpful to promote well-functioned trade along the route.Fourth,due to the existence of the influence mechanism of differences in cultural values,cultural differences have a dual effect on trade between China and “the Belt and Road” countries.On the one hand,differences in cultural values between countries will reduce the sense of demand recognition of foreign consumers and hinder international trade.On the other hand,cultural values are important sources of comparative advantage.Differences in cultural values between countries are conducive to the formation of products with different comparative advantages,offering conditions for trade cooperation between industries of countries along the route.At the same time,differences in cultural values between countries are conducive to product differentiation,thus offering conditions for intra-industry trade cooperation among countries along the route.Compared with the existing literature,the main contributions of this article are as follows:First,this article theoretically analyses the impact of cultural differences caused by non-economic factors on international trade and explains its logical mechanism.It constructs the theoretical mechanism of cultural differences affecting international trade.Theoretically,it offers evidence for the general mechanism that people use cultural psychology to influence trade consciously or unconsciously when carrying out international trade activities.This article enriches the theoretical framework of international trade because of this.Second,the innovation of the quantitative method in cultural differences.The Mahalanobis distance is applied to quantify the differences in cultural values.This article also lists the number of years of diplomatic relations between countries along “the Belt and Road” and China.This is to illustrate the dynamics of differences in cultural values between countries.Third,adopt the perspective of developing countries.The current research on the impact of cultural differences on international trade is mostly concentrated in developed countries in Europe and America.There is a lack of targeted research from the perspective of developing countries.As the lack of formal institutions is ubiquitous in developing countries,more attention should be given to the influence of informal institutions including culture on the foreign trade of developing countries.The current development phase offers us important opportunities for China to develop trade with countries along “the Belt and Road”.Studying the impact of cultural differences on China's trade with countries along “the Belt and Road” will help improve China's cultural adaptability in its trade along the route.The cost of trade will be reduced further as well;it is conducive to unleashing the trade potential between China and the countries along “the Belt and Road” and promoting the high-quality development of China's foreign trade;it is also conducive to bringing the countries along “the Belt and Road” into a community of mutual benefits,mutual destiny and mutual responsibility and build political trust,economic integration cultural inclusiveness.