Research On The Trade Effect Of China’s International Aid To Cambodia

In recent years,China’s foreign aid has developed rapidly and sustained a long relationship with Cambodia.International economic aid is to provide donation,medium and long-term interest free or low interest loans.Aid is increasingly focused on the needs of recipient countries,emphasizing the completion of the trade capacity and infrastructure construction that recipient countries need to benefit from trade opening.This paper focuses on the trade effect of China’s international aid to Cambodia.Based on Gravity Model,this paper introduces variables such as infrastructure level and trade openness to make empirical analysis by using cointegration test and error correction model.The analysis shows that in the Sino Cambodian trade,aid plays a strong role in promoting Cambodia’s import trade,and the priority procurement right attached to aid can drive the export of China’s production and construction materials.Aid has a slight inhibitory effect on Cambodia’s export trade,which is related to the long cycle and lagging influence of China’s aid projects,but the improvement of infrastructure level has a significant role in promoting Cambodia’s export in the long run.China insists on infrastructure aid to Cambodia,so this paper analyzes the trade effect of aid from the perspective of trade cost.The empirical results show that the aid significantly reduces the trade cost between China and Cambodia,and the improvement of infrastructure reduces the cost of transportation,logistics and information in trade,so as to promote bilateral trade.In order to further enhance the effectiveness of aid,it is suggested to optimize the structure of foreign aid,strengthen technical and personnel training aid,broaden the scope of trade,improve the aid management and supervision mechanism,improve the ability of recipient countries to use aid,and strengthen trade opening.