A Study On The Influence Of Trade Cost On China And Its Neighboring Countries' Economic Convergence

Due to the proximity of geography,China has frequent trade with its neighboring countries,and regional economic integration has developed rapidly.As neighboring countries have an important position in China's foreign trade,to expand bilateral trade,optimize trade structure and enhance mutual benefit of trade by reducing trade costs in the process of economic integration is of great significance,which will drive the common growth of China and neighboring countries' economies,and promote the rational distribution of regional integration interests among these countries.In this paper,we use Bayesian Spatial Durbin model to study regional income convergence of China and its neighboring countries with the concern of spatial correlation,and especially focusing on analyzing the impact of trade costs on regional convergence.The empirical estimation reveals that:Firstly,in Northeast Asia and Central Asia area,the regional economy is divergent in the direct effect and the overall effect,but is converging in the indirect effect,it means that there is an imbalance risk in the regional economy.In Southeast Asia and South Asia area,the regional economy is converging in the direct effect,the indirect effect and the overall effect,it means that the regional gap is narrowing.Secondly,due to regional economic integration,the decline in trade costs has played an active role in the economic convergence of Northeast Asia and Central Asia,but its negative role in regional economic convergence is changing to be neutral in Southeast Asia and South Asia.Thirdly,in Northeast Asia and Central Asia,the proportion of industrial added value of GDP is not significantly negative,the added value of service is significantly positive,and the population coefficient is significantly negative,indicating that industry have limited effect on regional economy convergence,the service sector has played an important role in narrowing the per capita income gap between the six countries and countries with large population densities have had a significant impact on regional economic growth;in Southeast Asia and South Asia,the proportion of industrial added value of GDP is significantly negative,the added value of service is not significantly negative and the population coefficient is significantly positive,indicating that the greater the proportion of industry,the slower growth the country has,the service sector has no significant impact on the country's economic growth,while the population has played a positive role in regional economic convergence.Therefore,according to the specific circumstances of the region,China and its neighboring countries have to promote economic common development through the construction of "One Belt and One Road" and "interconnectivity",at the same time,they should use economic convergence to measure the rationality of the distribution of integrated benefits,pay more attention to the common development of regional economy and safeguard regional peace and stability.