International Trade Between China-Trading Partners Under “The Belt and Road” Initiative: A Case Study of Fujian Province

Abstract

After the Belt and Road Initiative was proposed, Fujian province became the core area of the Maritime Silk Road. The development of international trade in Fujian province has become the focus of attention of Fujian province and its trading partners. This study aims to identify the determinant factors influencing the Fujian province trade with 21 trading partners during 2005 to 2017 by using gravity model with panel data. Then selecting random effect model based on the result of Hausman test and Breusch-Pagan Lagrangian Multiplier test. The result shows that GDP of Fujian province and trading partners, population of trading partners, trade openness of Fujian province have a significant positively impact on trade and can promote trade. However, the distance of Fujian province and trading partners has significant negative impact on trade. The dummy variable whether close to sea is not significant. Moreover, based on the gravity model equation, the study calculates trade potential. According to the criteria of trade potential, the trade of Fujian province and trade partners can be divided into three different types. Firstly, potential remodeling, the trade relationship of the two regions is relatively close, the existing potential has been basically tapped, and new trade factors need to be cultivated. Secondly, potential development, the trade relationship of two regions is relatively stable, the existing potential has not yet been fully tapped, and there is still some space. Thirdly, huge potential, there is huge potential for trade between the two regions, and there is still a lot of trade space worth exploring.