Research On The Trade Potential Between China And Countries Along China-Europe Railway Express According To Stochastic Frontier Gravity Model

The train of China-Europe Railway Express that increased from less than 20 to more than 12,000 by 2020 is one of the important achievements of the " The Belt and Road " construction,which plays an essential role in promoting countries’ economic and trade development.The regular and large-scale operation of the China-Europe Express has reshaped the economic geography of China and Europe by shortening the trade distance,reducing the economic division and increasing the economic density.Therefore,a systematic study on China’s trade determinants and trade potentials and the countries along the China-Europe Railway Express is conducted to provide some empirical basis for policy theory.This paper combines qualitative analysis and quantitative research to study the impact of China-Europe Railway Express on trade between China and 23 countries along the route in terms of trade distance reduction and trade potential.The qualitative part first analyzes the impact of the launch of the China-Europe Railway Express as a new type of land transport on the world economy and confirms its crucial role in China’s cross-border trade.After that,the economic scale,foreign trade dependence and trade complementarity are analyzed in terms of the economic trade between China and the 23 countries along with the China-Europe Railway Express.In the quantitative part,the one-step method of stochastic frontier gravity model and trade inefficiency model is used to calculate the level of trade potential between China and the countries along with the China-Europe Railway Express,and the different logistics and transportation costs before and after the opening of the China-Europe Railway Express are innovatively used instead of the traditional method of describing the trade distance between the two countries by the straight-line distance between the two capitals.The impact of the differences in political and economic regimes on the realization of trade potential.Specifically,China’s trade efficiency and trade potential and the 23 countries along the China-Europe Railway Express are analyzed in terms of total,regional and country.The empirical results show that(1)the average trade efficiency between China and the 23 countries along the China-Europe Railway Express is 0.74,and there is still a quarter of trade potential that can be exploited.Among these areas,better performance happens in Central Asia and East Asia,and worse in Central and Eastern Europe.(2)the average trade efficiency of China and 23 countries along the China-Europe Railway Express shows a trend of rising(2000-2008),then falling(2009-2016)and then gradually rising(2016-2019),while a significant fall in 2020 is affected by the epidemic.(3)the trade potential of contributing factors includes economic aggregates,population,degree of economic openness,and whether it is landlocked.Every 1% increase in China’s GDP can lead to a 0.528% increase in China’s total imports and exports to the 23 countries along with the China-Europe Railway Express.Logistics costs are proven to weaken trade potential,and each 1%reduction in logistics costs increases China’s total imports and exports to the countries along with the China-Europe Railway Express by 0.465%.(4)In terms of factors affecting the realization of trade potential,country differences in the degree of political stability,country differences in financial freedom,and country differences in trade freedom have greater influence.Trade efficiency will rise by 10.1% if the gap of10 points in the trade freedom score is reduced and by 10.1% if the gap of 10 points in the financial freedom score is reduced.Therefore,finding new economic growth points under the downward pressure of the economy,further strengthening the construction of China-Europe Railway Express,and enhancing the mutual integration and interoperability between different institutional environments become questions worth thinking about.