The Change Of The Trade Cost Between China And Eu And Its Revelation

Trade cost is regarded as exogenous variable by traditional theory, it never be incorporated into trade theory to discuss within the framework of the model.However,with the further development of economic globalization and international trade theory innovation, more and more scholars to realize the key role of trade costs. Thus there is an increasingly important research related to trade costs and make it become the core concept of international trade theory After the EU eastward expansion since 2005, its trade with China increased dramatically, became China’s largest trading partner and always maintained a leading position in 2013.If it can be to measure the economic cost of China and the EU, not only can understand China’s international division and specialization patterns, can also provide direct evidence of China’s increasingly open.This paper draws on Novy based improved gravity model and the new model based on general equilibrium refactoring Anderson multilateral this two kinds of methods to measure the bilateral trade between China and the EU in 1994-2013 cost and make a comparative analysis.Results show that the two methods are very different:First,Novy improved gravity model calculated result is that China and the European Union’s trade cost continues to decline, which keep in line with most research results.The new model of measuring results is that trade cost between China and the EU member have a trend of fluctuations, and even bilateral trade costs of some countries are increasing.Second a new model of a hypothesis is the asymmetry of market share, that the assumptions is different from Novy improved gravity model.Therefore the results of measure found that in 1997 China’s trade with the European Union’s 27 countries of the lowest cost six countries:the Netherlands,Finland, Germany, Romania, Bulgaria, Sweden.Estonia promoted the first place in2013, followed by Denmark, Hungary, the Netherlands, Germany, Belgium.That is not consistent with countries’ trade volume level.The result raised a question: Trade valume between two countries is large doesn’t mean their bilateral cost is low.That trade costs is just one of the factors which influence trade volume between the two countries. In addition, this article also took advantage of the new model to calculate unilateral trade cost between China and the eight of European Union countries and industry trade costs.Found that the China unilateral cost and the EU unilateral cost are asymmetric.The measuring methods used by most scholars at present assumed symmetrical on both sides of the market share don’t conform to the reality.The calculated result of industry trade cost is that textile trade costs have decreased from0.98 to 0.31, droped of 69%.Meanwhile it reflects textile is our advantage exporting industries.And the minerals,timber industry; Chemical, plastic industry;Mechanical electronics;Miscellaneous products industry which trade cost is steadily rising.Animals, food industry; Shoes industry, transportation industry showed a trend of fluctuations in the cost of trade.Finally, this paper analyses factors that influence bilateral trade costs,found that national open degree, per capita income disparities,information barriers, infrastructure, and if they are for the unified trade organization which had a significant negative effect on trade cost. Finally on the basis of theoretical analysis and empirical research,puting forward policy suggestions to reduce trade cost between China and the EU.