Research On The Home Market Effect Of China's Trade With "The Belt And Road" Countries

Forty years since the reform and opening up,the development of China 's foreign trade has always benefited from low labor costs.However,with the gradual loss of the “demographic dividend” advantage of China 's economic development,the Home Market Effect has been used to explain the current development of China 's foreign trade as a one of the drivers is widely used.The Home Market Effect describes that under the conditions of increasing trade costs and increasing returns to scale,the increase in domestic market demand for a domestic product will make the country an importer and exporter of the product.“The Belt and Road” strategic idea was formally proposed in 2013,not only to further promote the development of international trade between China and the countries along the “The Belt and Road”,but also to coordinate the balanced development of eastern and central and western regions of China.In the context of the “The Belt and Road” construction,this article combines China 's “The Belt and Road” strategic vision with the theory of Home Market Effect,draws on the trade gravity model created by Schumacher(2003),and uses the panel of China 's trade with the countries along the line from 2002 to 2018.The data empirically test the existence of Home Market Effect of the overall import and export trade between China and the countries along the “The Belt and Road”,six major regions,and seven major industries based on the HS classification.The conclusions of this study are as follows: First,there is a Home Market Effect in the overall import and export trade between China and the countries along “The Belt and Road”.The Home Market Effect promotes the growth of China 's trade with the countries along the route slightly more than the traditional factor endowment.The effect has become one of the comparative advantages of China 's trade with the countries along “The Belt and Road”.The expansion of the domestic demand market in China will promote China 's merchandise trade with these countries.Second,the empirical test in the regions of these countries in the following four regions,Home Market Effect detected.Third,in the empirical inspection of the seven major industries based on HS classification,four industries have been detected in the Home Market Effect;fourth,continue to promote While building the “Belt and Road” initiative,we must continue to adhere to the active policy of expanding domestic demand and fostering internal markets,and give full play to the role of Home Market Effect in promoting trade growth between China and the countries along “The Belt and Road”.