Study On The Measurement Of China Service Trade Cost, Contribution To Trade Growth And Influencing Factors

Currently, international trade in services is becoming more and more important part of the country’s foreign trade.Since the 1980s, China’s international service trade has seen rapid development, but compared with trade in goods, it still has much room for development. In the mean while, compared with other developed countries in the world, China’s international trade scale and level in services still has a large gap. Previous literature focuses mainly on service trade competitiveness, our research bases on service trade cost, from the connotation of trade costs, measurement of service trade cost between China and OECD countries, contribution of service trade cost to bilateral trade growth in services and factors affecting service trade cost. We establish a framework for a complete analysis of China’s international service trade cost, which has important and far-reaching significance in promoting the development of China’s international trade in services by reducing the bilateral service trade cost.In this paper, learning from foreign scholars who derived trade cost measurement method from the modified gravity model, we use the latest database to make an measurement of bilateral service trade cost between China and OECD countries from 2000 to 2013. The results show that China’s foreign service trade cost substantially decline. Through the decomposition of trade growth model, we found that the growth in services output and the decline in bilateral service trade cost are the main driving forces of service trade growth between China and OECD countries, service trade cost empirically contribute to bilateral trade growth in services. We have also studied the factors that may influence on China’s international service trade cost theoretically and empirically which consist of geographical factors, economic factors, cultural and historical factors, the development of information factors, policy and institutional factors and international environmental factors. We make the following conclusions: the farther between the two sides, the bigger of the RMB exchange rate fluctuations and the deterioration of the international environment will significantly increase bilateral service trade cost. The greater scale of services sector of both sides, the greater gap of the per capita income, there is a historical link, the higher level of information development, the more open market, the faster of the process of urbanization and accession to WTO will reduce bilateral service trade cost. Finally, from promoting service industry development, enhancing development of information technology and infrastructure, promoting bilateral and the multilateral trading system and so on, we make some policy recommendations to further reduce China’s international service trade cost and promote the development of international trade in services.