An Empirical Analysis of New Trends of China's Foreign Trade Based on Trade Gravity Model

The Trade Gravity Model is a prevailing method in studying the current phenomena of international trade. The model has experienced upgrading with the evolvement of international trade. China has been progressing in trade liberalization and open policies. Since China has been the third largest country of export import, determinants of foreign trade should be paid attention to under the new driving force of foreign trade. In this paper, we apply the Gravity Model to explain China's bilateral trade flows and acquire policy implications. The empirical study shows that China follows an intra-industry trade pattern and FTAs between China and other countries play a significant role in pushing the expansion of foreign trade.