Trade Potential of China’s Export to ASEAN: The Gravity Model Using New Economic Mass Proxies

Yuqin Zhang and Wang Shouyang ()
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Wang Shouyang: Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Beijing100190, China

Journal of Systems Science and Information, 2015, vol. 3, issue 5, 411-420

Abstract: Considering the fact that China is the world factory, in which the trade of intermediate goods has a relatively high share and especially that the trade of intermediate goods with ASEAN is even higher, it is not suitable to use GDP as the economic mass proxies in the gravity model to estimate trade flows traditionally. This paper, by using the data between China and 10 member states of ASEAN along with other 12 main trading partners of China from 1999 to 2013, constructs China’s bilateral export equation based on the gravity model using new economic mass proxies according to Baldwin and Taglioni, and then calculates the trade potential index of China’s export to the member states of ASEAN by using this equation. The empirical results show that, China’s export trade equation based on new economic mass proxy has stronger explanatory power compared to the standard gravity model by using GDP as economic mass proxy. Therefore, the calculating results of trade potential of China’s export to ASEAN are more convincing.

Keywords: gravity model; trade potential; trade intermediate goods; China-ASEAN free trade area (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:bpj:jossai:v:3:y:2015:i:5:p:411-420:n:3

DOI: 10.1515/JSSI-2015-0411

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