An Empirical Research On The Home Market Effect Of Sino-U.S.service Trade

Since the accession to the WTO in 2001,China's commodity trade has made great progress.Compared with commodity trade,China's service trade has a shorter development time and weaker foundation,together with a long-term deficit in exports,especially the bilateral trade with the United States.Under the new circumstances,finding an industry with Home Market Effect in the service trade between China and the United States will help reverse the trade deficit,expand the scale of China's service exports,and ultimately promote the sustainable development of foreign trade and the national economy.On the basis of previous studies,this paper firstly explains the mechanism and applicability of the Home Market Effect respectively from the perspective of economics and reality,analyzes the overall development status and structural characteristics of the service trade between China and the United States,and finds that the competition advantages of transportation,tourism and other commercial services are obviously,which provides reliable expectations for the following empirical tests.Based on the improved gravity model of Schumacher and Siliverstoves(2006),this paper empirically tests the existence of the Home Market Effect by using the trade data of Sino-US services trade in2006-2016.The results show that there is no Home Market Effect in the overall services trade between China and the United States.While,there are four of the nine sub-sectors have obvious Home Market Effects,which are the transportation services,insurance services,telecommunications computers and information services,and government services.Then this paper briefly analyzes the cause of the result.Finally,based on the above empirical results,this paper provides policy recommendations to promote the sustainable development of Sino-U.S.services trade from the perspectives of actively nurturing domestic markets,establishing key industries,encouraging enterprises to innovate independently,and improving trade legislation,which provide strong support forenhancing the export competitiveness of China's service trade.