Study On China's Bilateral Trade Based On Trade Gravity Model

Nowadays, no country can survive without international trade. The history of international trade indicates that only by taking part in the international trade and international division actively, the economy of one country can grow fast and the national wealth can increase steadily. Under the recent international conditions, the conflicts between China and other countries emerge consistently and frequently, which result in the popularity of the theoretical analysis of international trade, a great deal of analysts not only do their research on theoretical side, but also apply econometric modeling methods to analyze the international trade using trade data from these countries. The Gravity Model is one of the best among these methods.The paper emphasizes on the method analysis, and then by using data between China and other 16 countries to imply some questions, do some conclusive illustrations. This paper uses panel data to do research, and do a short description for HTM model. The result of the paper indicates that HTM model is better than FEM and REM in the analysis of international trade. Apparently, the estimation result is consistent with our expectation. On the basis of the result, this paper use HTM to do a brief analysis, which indicates that trade situation between China and other countries is serious, which is similar with the results done by Mrs. Lin.