Research On Sino-US Trade Efficiency And Potential Based On Stochastic Frontier Gravity Model

The Sino-U.S.trade has been expanding since the establishment of bilateral diplomatic relations 40 years ago.China and the United States have become important trade partners to each other.In 2017,the United States has become China's second largest trading partner,and China is the third largest export market and the largest source of imports for the United States.However,the trade imbalance between the two countries has continued to deepen in the past decade,and the US trade deficit has continued to expand.In the past year,US President Trump has successively implemented a series of trade protectionist measures affecting the economic and trade relations between China and the United States.The direction of Sino-U.S.economic and trade cooperation has aroused widespread concern in the world.When investigating Sino-U.S.trading relationship,it is a question we have to face that how can the relationship be enhanced by fulfill the potential,increase the efficiency and tackle the obstacles.On the basis of reviewing related theories and literature,the paper firstly discusses the history and current situation of Sino-U.S.bilateral trade from the three aspects of Sino-U.S.bilateral trade volume,development characteristics and potential influencing factors.The paper collects relevant panel data between China and its top 20 trade contacts during 2007-2016,builds a random frontier gravity model,and applys Frontier 4.1 software to return time-varying models and time-invariant models,respectively.A series of empirical analysis of trade efficiency reveal the direction of the role of each explanatory variable in the overall trade environment.The conclusion shows that the per capita GDP of a country and the use of a common language between the two countries have a positive impact on trade flows,and population size,geographical distance,and the existence of a borderline contact have a negative impact on trade flows.Furthermore,by measuring the bilateral trade efficiency and potential between China and the United States,it is found that Sino-U.S.bilateral trade efficiency was significantly lower than export efficiency during 2007-2016,and the import and export potential was more than twice the actual bilateral trade volume over the years,export potential and actual export value.The difference is small but shows a significant growth trend.At the same time,the impact of exchange rate factors on bilateral trade volume offsets each other.The paper further examines the Sino-U.S.exchange rate,which has received much attention but has not been used as a key explanatory variable of the model,to ensure that the empirical results are accurate and policy recommendations are effective.Finally,the paper summarizes the potential of Sino-U.S.trade from three dimensions of the role direction of core variables,the empirical results of trade efficiency,and the potential for trade potential improvement,and analyzes the constraints of Sino-U.S.trade and economics from the perspective of current policy trends in China and the United States.Development advice is further proposed.