Empirical Research On Trade Relations Between China And The Five Central Asian Countries

On September 7,2013, Chinese President Xi Jinping delivered an important speech at the University of Kazakhstan Nursultan Nazarbayev, which proposes building the "Silk Road Economic Belt". China’s 18th third plenary session further mentioned that we need to promote the development and the maritime construction of the Silk Road economic belt, to form new pattern of comprehensive opening to a new situation. The Silk Road economic belt grows to become an important part of China’s peripheral diplomacy and foreign economic exchanges strategy layout, which also becomes an important link between China and Eurasian countries. China and Central Asian countries built The Silk Road economic belt together to bring back a traditional significant traffic link to the world. Eventually this punctual experience could be widened and gradually expanded to larger cooperation areas. For this reason it is of great strategic meaning and practical significance to study the trade relations between China and the five Central Asian countries under this background.On the basis of literature review, this paper first describes the current situation of trade relationship between China and the five central Asian countries, sorts out import and export trade structure (including the commodity structure and the country structure) between China and the five central Asian countries during the 2005-2014 interval. This paper also carries out a comparative analysis between different years and different countries, and sums up the characteristics of the current trade relations.Secondly, according to the theory, this paper analyzes the trade conditions and the key factors which influences the trade relationship between China and the five central Asian countries and also deduces the transmission mechanism of each key factor. Because the geographical advantages, trade complementarity, resource advantage, cultural advantage and the political environment advantage exists, which makes the trade between China and the five central Asian countries possible. And the more obvious these advantages are, the more intimate trade relationship is and the larger trade scale is.Moreover, based on the empirical level, this paper introduces the gravity model and uses the relevant data to do an empirical test. Finally, this paper puts forward a series of policy suggestions based on the theoretical description and empirical results. This paper concludes that, (1) There is a fast growing speed in the bilateral import and export trade between China and the five central Asian countries. The bilateral and multilateral trade scale expands gradually, but most of the years China faces trade deficit, that means China’s import from the five Central Asian countries is greater than China’s export to these countries. (2) The trade relations show a greater imbalance and certain volatility characteristics between China and the five Central Asian countries. Also, among the five Central Asian countries, Kazakhstan, Kyrgyzstan and Uzbekistan are together one of China’s main export markets, while the trade quantity with Tajikistan and Turkmenistan is relatively small. (3) In spite of China and the five Central Asian countries being important trade partners, the variety of traded goods is relatively small. Traded goods are mostly resource-intensive and labor-intensive products, while capital intensive and technology intensive products have a relatively low proportion, which remains to be further improved. (4) National economic development level, the population dimension, the border effect and geographic distance are the main factors influencing the foreign trade between China and the five Central Asian countries. One percent growth of GDP will drive the bilateral trade growth by 0.976%. The variable coefficient of population size is-0.930, which is different from the expected variable symbol. The population scale hinders the bilateral trade between China and the five Central Asian countries. The trade between Uzbekistan, Turkmenistan, Tajikistan and China is relatively low compared with the remaining other two countries, because Uzbekistan, Turkmenistan and Tajikistan are more distant from China, which makes transportation costs higher. (5) After introducing the border effect and WTO virtual variable, the effect of population scale and geographical distance on the trade between China and the five Central Asian countries is weakened. However, the border effect and the economic scale still has significant positive influence on the bilateral trade.Based on the above analysis and conclusions, this paper puts forward a series of policy suggestions, including:cooperating hand in hand; strengthening the infrastructure construction; strengthening exchanges; eliminating concerns between the five Central Asian countries and China; strengthening the negotiation and protection of tariffs and non-tariff barriers; providing assistance with special loan; building an independent economic alliance with the five Central Asian countries; expanding the bilateral cooperation and trade scale according to the principle of resource endowments and comparative advantage; enhancing the competitiveness of their enterprises. These are suggestions to help push forward China’s bilateral trade with the Central Asian countries.