EU-China trade: Geography and institutions from 2001 to 2015

Abstract

This paper applies a gravity model to assess the factors underlying trade between the European Union and China separately for the exports and imports from 2001 to 2015. The two models are estimated for the 28 European Union countries. A panel data analysis aims to capture the effect of time on trade flows in view of the dynamic process of economic integration in the EU and the global financial crisis. The results suggest that the insularity and landlocked nature of several European Union member states are beneficial for bilateral trade flows. The entry of the European countries into the European Union, their alignment under a common monetary policy in the Eurozone environment, and the subsequent gradual adoption of a common currency have brought a higher degree of interconnectivity between the member states and have also made a positive contribution to European Union–China bilateral trade expansion.