A Research On The Home Market Effect Of China's Service Trade

The development of China's service trade is more and more quickly,but the development of the theory of trade in services is very slow,and some traditional comparative advantage theory and new trade theory can not explain some phenomena,therefore,we need to seek a new theory to explain the current situation of service trade in China.Combined with a large population in our country,and the domestic market is huge,so this article explores whether there is a home market effect in China's service trade,whether it is because the presence of home market effect promotes the export of China's service trade.Firstly,this paper introduces the development of service trade in China.This paper selects the import and export data of China's service trade from 2007 to 2017,and introduces the overall development of China's service trade.Then,this paper selects the import and export data of various service sectors in China in the last six years,and introduces the development situation of various sectors of China's service trade.Finally,based on the previous data,this paper analyzes the general trend of service trade in China.The analysis shows that the total import and export volume of our country is increasing,but the trade deficit is serious and is expanding,especially in the tourism department and transportation department.The development provides background conditions for the existence of home market effects.Then,this paper makes an estimate of the home market effect of China's service trade.Based on the predecessors' gravity model,this paper selects relative exports as interpreted variables,relative demand scale,relative capital labor ratio and relative per capita income as explanatory variables.This article selects the the data from 2000 to 2016 that China's bilateral service trade with 30 major trading partners and China's seven major service department of trade in services trade data as sample data,uses GDP to measure the size of the demand,uses the enrollment in colleges and universities and the average education years as substitution variables of capital labor ratio.The home market effect of the service trade of the whole and the seven sectors in China is tested respectively.It is concluded that the home market effect of China's overall service trade does exist,and it also has the comparative advantage of factor endowment.There are four departments in seven departments have significant effect of the home market.Among these,some departments have home market effect and are also affected by the comparative advantages of factor endowments,illustrates the effect of the home market and the advantage of factor endowments are not incompatible.However,according to the development of the current situation in our country,our country has a large population,but labor advantage is gradually lost.It's expected that the home market effect will plays a more and more important role in promoting the development of China's service trade.Finally,this paper summarizes the previous conclusions and puts forward some suggestions on the development of service trade in China.First of all,China should give full play to the home market effect of service trade,take advantage of the large domestic market in our country.Through mass production,we can form economies of scale,reduce production costs and improve the export competitiveness of China's service trade,thus promote the good and rapid development of China's service trade.Secondly,China should focus on developing new trade in services,optimize the internal structure,promote transformation and upgrading of China's service trade to modern service trade with new service trade.Finally,China should raise the per capita income level and stimulate consumption,combining individual needs with population size to form a larger market demand,utilizing the local market effect to promote the development of China's service trade.