Technology,Trade Costs,and The Welfare Effects Of International Trade In China:Quantitative Evaluation Of Comparative Advantage Model

After entering the WTO,China has made great achievements,becoming the largest trading partner of 120 countries and regions and being an indispensable part of the world free trade system.According to the National Bureau of Statistics,China's total import and export volume in 2017 was about 4 trillion US dollars,and GDP per capita was 8582.94 US dollars,which is nearly 8 times that of 2001.The increase of per capita income is highly correlated with the growth of trade.How to measure the gains from trade is the core issue of current research.Aiming at this goal,this paper will build a quantitative model of multinational trade based on the theory of comparative advantage to measure trade cost,technology and gains from trade.Furthermore,this paper estimates the effect of different policies on the base of counterfactual analysis.Under the framework of comparative advantage theory and the existing research,this paper constructs a quantitative international trade models and derives the expressions of trade volume,equilibrium wage and gains from trade.The existence and uniqueness of trade balance are proved.In this paper,the trade and production data of 120 countries and regions in the GTAP9 are used to calibrate the trade cost and the technology parameters of each country in the theoretical model.Based on the counterfactual analysis,the effects of different policy are quantified.The conclusion are as follows:(1)The trade costs of the developing countries are generally greater than those of the developed countries.(2)The differences of technology between the north countries and the south countries are still larger,but the speed of catching up is very fast.(3)On one hand,China's trade costs are relatively low and have relative advantages.On the other hand,China has a larger space to increase trade benefits by upgrading its technology.(4)The results of the counterfactual analysis further indicate that technological progress,tariff or non-tariff cost declines will improve the gains from trade.But regional trade agreements will cause welfare damage to non-member states.Therefore,our government should enhance its comparative advantage by improving its technological level,reducing tariff and non-tariff barriers,and reducing trade costs.At the same time,our government should actively participate in the process of trade liberalization,oppose trade protectionism,and adhere to win-win situation.