Research On Business Cycle Synchronization Between China And "One Belt And One Road" Countries

Nowadays, profound changes are taking place in the world. The world economy is recovering slowly, and global development is uneven. Every country still faces big challenges to their development. Since the reform and opening-up, China’s economy is closely connected with the world economy via trade, investment and finance and so on. The Initiative of "One Belt and One Road" strategy will enable China to further expand and deepen its opening-up, and to strengthen its mutually beneficial cooperation with other countries in the world. It’s an important measure in China new normal.With the implementation of "One Belt and One Road" strategy, the study of business cycle synchronization between China and other " One Belt and One Road " countries become the focus of economics. Basing on the international business cycle theory, this paper studies the impact of bilateral trade intensity, intra-trade index, industrial structure similarity, bilateral foreign direct investment, fiscal and monetary policy and FTA on the business cycle synchronization from 1990 to 2014. Firstly, the paper verifies the increasing business cycle synchronization between China and other "One Belt and One Road" countries by using HP filter and impulse response function. Secondly, constructing the panel ordinary least square fixed model and panel instrument variable estimate, the empirical part draws some conclusions as follows:(1) Bilateral trade intensity, intra-trade index, FTA decrease business cycle synchronization significantly, which is attribute to inter-trade between China and "One Belt and One Road" countries; (2) industrial structure diversity and bilateral foreign direct investment promote the business cycle synchronization, but bilateral foreign direct investment isn’t obvious; (3) fiscal policy, monetary policy and business cycle synchronization are negatively related. Finally, the government should adjust the import and export structure, improve the level of intra-trade, upgrade the industrial structure and build the early-warning mechanism and so on.