Study On The Impact Of New Arctic Waterway Opening To China’s Trade Pattern

With the global warming, there is possibility to open up a new ship route across the Arctic Ocean. It will reduce the distance between China and Europe or North America. Based on the classical gravity model, this paper selects a cross section sample of China and her114trade partner countries’trade flow, GDP and distance data in2010, address on the impact and implication of the shorted ship route distance to the international trade pattern. This paper also predicts the new scene of China and her trade partners if the new ship route is open. This paper learns and develops the basic framework of enterprise heterogeneity model published by Melitz in2003.Based on previous studies, this paper collected large amounts of data, econometric analysis of the possible impact on the new ship route opening from the two aspects of trade in goods and trade in services. This article Econometric Analysis114countries in2010and China’s trade in goods and a more complete cross-section data for the sample by Trade Gravity Model, the focus of analysis to shorten the shipping distance on international trade in goods traffic, predict the Arctic waterway opening of China’s trade pattern of change. This paper also analyzes the94countries and China’s service trade data in2010, address on the implication of the distance variation to the international trade in service.This paper predicts the new scene of China and her trade partners if the new ship route is open. Followed by quantitative analysis, the conclusion is:1) when the opening of the new waterway between the two countries caused by the shipping distance decreased by1%, China’s export trade will increase by0.6808%.2) After the opening of the new route, China’s total trade flow will increase to112.67%of that in2010.3) The Arctic new route will replace or sharing the logistics of the three routes: China-East Coast of North America, Western Europe, sword routes and China-Scandinavia, the Baltic route.4) China and Europe, North America’s trade volume will increase substantially.5) For trading partner, after the opening of the Arctic waterway, the United States, Germany, Netherlands, United Kingdom, Italy, Canada will further increase trade with China.6) The new route will reduce the trade cost by15%-35%.The paper referred Meiltz and other manufacturer’s heterogeneous theory to analyze the impact of this change on the micro-enterprise. The opening of the new route for China’s manufacturers will produce a new round of the selection process. The shipping cost reduction, the export of critical productivity lower, more businesses have the ability to export. At the same time, manufacturers an average increase in productivity has forced inefficient manufacturers to stop the export business and even out of the market. The new waterway opening of the increase in market share and profits increased by the screening mechanism of the above set the highest standards of corporate to productivity. The ultimate effect of screening is to enhance China’s total welfare.Based on findings, China should increase its efforts on right to use the new route, as soon as possible to bring the cost reduction and benefits increase. China’s export enterprises should have a forward thinking, exploration and development of new routes as soon as possible. China’s export enterprises also need to improve productivity.