Empirical Research On The Main Influencing Factors Of China’s Terms Of Trade

Since china joined WTO, it has become a great power in the world economy with its rapid growth in international trade. However, china still faces a lot of problems, for example, china’s terms of trade has always been worsening because of its low position in the international division of labor and its exporting companies’ vicious competition. In this regard, research on the main influencing factors of china’s TOT has great significance.This paper has firstly organized and summarized the previous research results in the field of terms of trade, and found out that china’s TOT is much worse than the rest of the countries in the world, which makes us do the theoretical research on TOT’s influencing factors. On that basis, I collected the relative data from WB and IMF’s database which covers41countries data from2003to2011to do the empirical research. I took many factors into consideration in my panel data model, such as tariff, labor productivity, FDI, interest rates and especially the innovative factor:currency volatility. I want to try and see the currency volatility’s influence on the terms of trade because of foreign countries’ quantitative easing policy. Finally I give some policy suggestions based on the empirical results.This paper has many innovative parts. First, I took the currency volatility as an influencing factor of terms of trade into consideration to broaden the research scope. It has never been done before. Second, it is innovative to use the panel data covering the main countries in the world to do the empirical research compared with the time series data in the previous study. Third, except for the traditional test methods, such as heteroscedasticity, autocorrelation and multicollinearity, in the empirical study, I also used the Hausman Test to analyze the fixed effects and random effects. And finally, I used five different kinds of estimation methods to make the result more persuasive.