Analysis of China's importance in "belt and road initiative" trade based on a gravity model

Abstract

This study used a gravity model to analyze the importance of China within the "Belt and Road Initiative" (BRI) trade pattern based on different regression methods, including pooled ordinary least squares (POLS), fixed effects (FE), and the Heckman two-step calculation. The results show that from 2000 to 2018, China's position in the BRI trade pattern constantly rose in both exports and imports. After removing zero trade flow, POLS and FE analyses showed GDP and a common language had more influence on national exports than population or common religion. The Heckman two-step results with zero trade flows are similar to the other regression results, showing that both a country's economic aggregate of a country and a common language between two countries were important during trade exchanges. China is one of Eurasia's most attractive trading partners; while China provides more goods for BRI countries to export, it also provides a huge market for other BRI countries' goods while promoting their economic development. Thus, China plays a very important role in the BRI trade pattern. Its huge export/import growth potential is a key economic foundation for further promoting Eurasia's economic and trade integration.