Foreign Trade Development And China's Economic Growth

From the day of China's reform and opening policy adopted in 1980, China's economy melt with the world' economy go further, China's merchandise trading with foreign countries has made progress, and China's foreign trade are playing more and more important part to the development of China's economy.Because there are many facets affect China's trade and China's economic growth, so it's essential to establish an equation to describe these effects on China's trade and China's economy growth, and then we can analyze these factors' relationship with each other and analyze these factors how to put effects on China's economy, China's investment and China's trade. As the reason referred above, this paper establish a simultaneous equation with mainly factors which effect China's trade, China's investment and China's economic growth. In the simultaneous equation, through various forms of elasticity reflect the factors how to affect three respects referred above.This paper through simultaneous equation analyze economic variables for the reason that simultaneous equation can get more information from economic variables than single equation, and it can provide a more reasonable explanation which amplify many variables how to affect each other in complicated economy system.The solution of this simultaneous equation is not a thing once for all, it concerns many pre-work, such as serial correlation test of time series data, heteroskedasticity test of structural equation in simultaneous equation and structure stability test and so forth.Finally, we get an estimated simultaneous equation, through the analysis of the estimated simultaneous equation illustrate the economic variables how to affect each other and how much the degree of effects, and then analyze the effects of causality and provide practical policy suggestions which promote China's economic growth.