The Impacts Of Bilateral Relations Between China And Major Powers On Bilateral Trade

This paper firstly demonstrates the bilateral relations between China and other 11 major powers as well as bilateral trade in the period of 1975-2015.Then,the traditional gravity model is used to conduct regression analysis,with bilateral relations as explanatory variable and bilateral trade as explained variable.This paper then makes further robustness test by dividing the studied period,by adding more control variables and by conducting the endogenous analysis.The results shows that bilateral relations have strong positive impacts on major powers' exportation to China,but weak or even no impact on importation,therein developing major powers are more easily influenced then advanced economies.The endogenous analysis also confirms our result.This paper suggests that China use different strategies between advanced economies and developing ones.As for advanced powers,the changes in bilateral relations has little impact on China's import behavior,because China is still heavily dependent on their exportation,thus we should increase our competitiveness in our trading activities;however,we may,to some extent,punish our developing partners by lowering bilateral relations when they touch the core interest of our country.The paper presents several innovation points.Firstly this paper measures the causal relationship between bilateral relations and trade among China and other major powers since the Opening Reform,in consequence,the policy suggestions are more relevant.Furthermore,this paper confirms the veracity of "China and major power relationship database" in the use of international trade;finally,this paper shows an analysis in depth due to the introduction of some innovative control variables and endogenous test.This paper gives a more robust result compare to other papers of similar topic.