Sino-Russia Border Trade: Theoretical Analysis And Empirical Study

Since the implementation of Western Region Developing Strategy, seeking better trade relationship with Russia's frontier areas is becoming an important part of the opening up endeavor of the northeast provinces and cities, which share the same border line with Russia counterparts. Along with the revival of Russia's economy, and the priority both central governments giving to the Sino-Russia economic and trade cooperation, trade between China's frontier areas and their Russian counterparts is greeting another golden time. However, new breakthrough is desired to upgrade Sino-Russia border trade, rather than traditional trade mode. This paper studies the comparative advantage and trade cost between China and Russia through combining the theories of international trade and New Economic Geography. Through the analyses of the NTB index and LQ index of border cities in China, we find that the comparative advantage foundation of border trade is similar to country's level. We also find that there is high trade cost between Sino-Russia border trade due to the caprice of Russia's policy and the lag of ports infrastructure construction of both sides, which hinder the further expansion of Sino-Russia border trade cooperation.Based on the above analyses, this paper also tries to study the prospects of Sino-Russia border trade. It is predictable that the Sino-Russia border areas enjoy a large potential to enhance the cooperation in such areas as energy, resource and labor. Besides, the future is quite promising due to Russia's upcoming entry into the WTO and full momentum of globalization and regional integrations. Take all the factors into consideration, some suggestions are put forward with the reference of NAFTA successful experiences.