Cultural Difference, Institutional Difference Affect China’s Exports And Imports

With the development of economic globalization, countries or regions depend on each other much more closely through foreign trade, capital flows, technology transfer, services trade and other activities. As an important part of the world economy, international trade is no longer just an economic phenomenon. It is also closely related to a variety of geographic, institutional and cultural factors. Some scholars found that the current real total trade flows is far less than that the total international trade theory predicts and that geographical distance has growing weakened influence on international trade flows, then national culture and institution become new influencing factors of foreign trade. Because cultural and institutional understanding to promote international trade are the main trend of our era, So it’s of great significance to study of the role of cultural factors, institutional factors in China’s fast, secure and stable foreign trade development.This paper reviews the research status of cultural distance as well as international distance’s effects on international trade. Then use Transaction cost theory, Internalization theory, preference similarity theory as the theoretical basis, it demonstrates cultural difference and institutional difference how to affect China’s import and export trade. Due to different moral values, language, values, education, social structure and so on five aspects of culture are different, thus different countries or regions culture affect international trade. Institutional differences focused on different protection of property rights, contract enforcement, government effectiveness, rule of law environment, control of corruption thereby affecting the cost of international trade.And then it analyzes China’s foreign trade development:first this paper introduces China’s import and export trade volume, trade structure and international competitiveness of three angles. Second this paper builds a new Trade Gravity model based on China and 30 major trading partners (Region) 2002--2014 years of trade flows, using the panel model random effects regression analysis to verify the cultural difference, institutional difference’s overall influence of China’s import and export trade. Finally following conclusions are taken based on the regression analysis of six samples and then this paper expects to be able to put forward policy recommendations.The study shows that:1) cultural difference and institutional difference significantly impede the import and export trade between China and the overall sample of countries and regions, and the impacts are almost equal.2) There are no significant cultural difference effects on export trade between China and the developed economies, but the inhibition of import trade is very strong; and institutional differences seriously affect China’s import and export trade with the developed economies.3) Cultural differences hinder China’s import and export trade with developing countries or regions, but influences weakened; institutional differences have a great impact on export trade between China and developing economies, but the influence on import trade was not significant.