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

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  • Zhang Yuqin

    (School of Public Administration, University of International Business and Economics, Beijing100029, China)

  • Wang Shouyang

    (Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Beijing100190, China)

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.

Suggested Citation

  • Zhang Yuqin & Wang Shouyang, 2015. "Trade Potential of China’s Export to ASEAN: The Gravity Model Using New Economic Mass Proxies," Journal of Systems Science and Information, De Gruyter, vol. 3(5), pages 411-420, October.
    • Handle: RePEc:bpj:jossai:v:3:y:2015:i:5:p:411-420:n:3
    DOI: 10.1515/JSSI-2015-0411
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    References listed on IDEAS

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    1. Maurice Obstfeld & Kenneth Rogoff, 2001. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 339-412, National Bureau of Economic Research, Inc.
    2. Yang, Shanping & Martinez-Zarzoso, Inmaculada, 2014. "A panel data analysis of trade creation and trade diversion effects: The case of ASEAN–China Free Trade Area," China Economic Review, Elsevier, vol. 29(C), pages 138-151.
    3. Daria Taglioni & Richard Baldwin, 2014. "Gravity chains: Estimating bilateral trade flows when parts and components trade is important," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(2), pages 61-82, November.
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    Cited by:

    1. Joanna Wolszczak-Derlacz & Yuxin Lu, 2022. "The role of the One-Belt One-Road initiative in China’s exports and global value chains," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 17(2), pages 317-341, June.

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