Does trade still follow the “flag”? Evidence from the partnership and bilateral trade in China

Jianjun Zhou and Gaoyi Lin

Journal of the Asia Pacific Economy, 2025, vol. 30, issue 2, 522-550

Abstract: Partnership is a typical “Flag” of China’s foreign relations, playing a significant role in promoting bilateral trade. This study examines the impact and mechanism of China’s partnerships on trade with empirical evidence, revealing that establishing a partnership increases bilateral trade by 25%; each level-up of the partnership will lead to a 6.8% increase in bilateral trade, with a dynamic impact lasting about five years. Partnership building mainly impacts bilateral trade through political interaction, bilateral investment, and cultural exchange between two countries, with cultural exchange playing a dominant role in the mechanism. Strengthening partnerships with Asia-Pacific, Latin America, African countries, low-income, and low trade size countries can create more potent bilateral trade effects. Furthermore, higher levels of partnership have an exemplary effect, bringing a positive spatial spillover effect on trade. This study affirms the significant role of partnership in foreign relations and trade, providing valuable insights to reduce trade risk and achieve high-quality development.

Date: 2025
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DOI: 10.1080/13547860.2024.2305303

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