Analysis Of Sino-japanese Trade’s Influencing Factors Based On Gravity Model

Since Adam Smith pioneered the theory of international trade in18th century,scholars all over the world has conducted a lot of researches on international trade，especially the study on influencing factors in the international trade. Japan, as a neighborof China, has its advantages in trading with China, such as its geographical location, tradestructure, and industrial pattern. Therefore, study on Sino-Japanese trade and itsinfluencing factors will have a positive impact on both China and Japan’s economicdevelopment.Firstly, based on the theory of international trade, this paper analyzes the main factorsaffecting international trade and its mechanism of action. Then, from the perspective ofSino-Japanese trade influence factor, it looks back the background and historicaldevelopment of trade between China and Japan, analyzing its characteristics andinfluencing factors in the process of development. Based on international trade theory andanalysis of reality between the two countries, this paper applies the gravity model todeducing the influencing factor model that is suitable to Sino-Japanese trade flow andanalyzes it empirically.According to the Sino-Japanese trade statistics (1990-2011), this empirical researchexpands and modifies the Tinbergen (1962) Trade Gravity Model and builds threeequations, that is total volume of bilateral trade model, China’s exports to Japan model andChina’s import from Japan model. The empirical analysis results show that economicdevelopment level and FDI have a positive role on Sino-Japanese trade, which is asexpected; the trade among China and other emerging trading entities also helps promotethe Sino-Japanese trade in a way, which is contrary to the expected crowding out effect;the bilateral exchange rate has no clear relations with Sino-Chinese trade. Furthermore, inscreening the indicators representing the economic development level, it finds that Japan’sper GNP contributes more to the export and import of Sino-Japanese trade compared withits overall GDP; China’s overall GDP contributes more to the export to Japan than its petGNP; China’s per GNPcontributes more to the import from Japan than its overall GDP. Finally, based on the current situation of Sino-Japanese trade and the results ofempirical analysis, this paper puts forward some policy suggestions to China as follows:further promoting the development of Japanese direct investment to China; maintainingthe relative stability of the exchange rate; improving the structure of the Sino-Japanesetrade to promote China’s trade competitive power; conforming to times and maintainingthe relationships with the original partners while seeking the new ones.