Using The Gravity Model To Estimate Potential And Barriers Of China Trade In Service

Services in the global economy is the largest sector. The proportion accounted for about two-thirds of world GDP. In industrialized countries, more than half of employment are from the service. Trade in service which based on services is to translate the production capacity of the service product into a tradable "intangible goods" or "intangible assets". This form for the trade will get value-added forms and realize more trade value by fewer resource. However, the proportion of trade in services lagged behind product trade and accounted for only about 20% in international trade flowsCrumbled by the availability of statistics, the research about trade in service is much logged than in merchant trade. However, it get the study easy to approach, for instance the application of gravity equation, which is first used in merchant trade. It is year 2002 that aboard scientist begin to study trade in service with gravity equation, contrast to this is until 2009 there is no research in domestic. It has potential step further more than nowadays research from the two aspects of data and modle.Based on the gravity model. This paper will distinguish and measure the determinants and barriers of trade in service and then estimate the export potential and tariff equivalent barriers of China's trade in service. In the empirical part of this paper, basic and expand gravity model will be used, four measurement methods will be applied. The results showed that:GDP, population, physical distance and FTA will show a different significance when they impact the total trade in service or sub-sectors; tariff equivalent barriers in service trade between China and major trading partners decreased insignificantly in last ten years. China should further reduce the level of import barriers and as soon as possible to establish an effective system of service export promotion.First, describe the target and meaning of this subject, then previous researchs, method and innovities.Second, describe the concept and category of trade in service. The point is put the found of two directions. One is some factors that have influence of trade in service. Then describe the methods to analysis barriers of trade in service.Third, according some comparasions, describe the trade in China. They are comparasion between import and export, comparasion between countries, comparasions between goods and service.Forth, give the first model and result. Standing on the import potential and export potential, discuss how to expand advantanges and exclus disadvantages.Fifth, give the second model and result. Gathcing the information of China and trade partner to discuss barriers of trade in service and find that there is space for continual disclinc of barriers. Prepare well for final conclusions.