The Effect Of The Internet On China's Foreign Trade

Using a gravity model of trade as its frame, this paper investigates the influence of Internet on China' S foreign trade. We find that Internet stimulates foreign trade, which mainly happened in the area of export. One percentage increase of the Internet leads to about 0.139 percentage increase in foreign trade, While a percentage increase of the Internet leads to about 0.22 percentage increase in export. But our model has little to do about import.We also find that the effect of Internet on China' s export of China was increasing. In addition, Internet was reducing the distance' s blocking effect on trade, That is, the influence of distance on trade is less when the Internet index is higher.Using the data of increasing rate, We find that a percentage point increase in the growth of the Internet index leads to about 0.06-0.07 percentage point increase in trade growth. Internet contributed to about a 3.5-4.0 percentage point increase in annual trade growth from 2002 to 2005. In other words, Internet contributed to eighth of the China' s annual trade growth during this period.