Research On The Influence Of Culture Distance On China’s Service Trade

The strategy of "The Belt and Road" proposed in 2013,the "Belt and Road Forum for International Corporation" held in 2017,and the "China——Central and Eastern European countries cultural cooperation BBS" held every year,are showing that the economic,trade and cultural relations between China and those countries along the "The Belt and Road " has received highly attention.As an important embodiment of the national strength,service trade has played an important role to maintain economic and trade relations for two countries.Considering that there are many countries along the road,spreading in different regions of the world,and having different living habits or historical traditions which we called it culture difference or culture distance,could easily arouse trade obstacles when services trade carried out.In that case,after analysing China’s situation and problems in service trade,this paper,employ the national culture dimension of Hofstede(1988,2001)combined with calculation methods of Kogut&Singh(1988)to externalize culture distance of China and Central and Eastern European countries.In the end,we explore the influence of culture distance on China’s service trade between China and Central and Eastern European countries with a purpose to find new factors that may influence china’s service export.There are three conclusions about the relationship between culture and trade:firstly,culture is a hindrance to trade;secondly,culture plays a part in the promotion of goods;thirdly,culture has a non-linear effect or non-effect on trade.However,they all focused on merchandise trade without considering the particularity of trade in services.This paper try to explore the influence of culture on service trade especially on China’s service export by using the extended gravity plus Ice-berg model as the empirical toolEmploying data for China’s service exports to Central and Eastern European countries in 2004-2015 for which measures of cultural distance can be constructed,the result manifest that greater cultural differences between the China and the partners reduces exports to those countries while the negative effect will emerge only when the distance is large enough,otherwise culture distance can promote bilateral service trade.Even if the total effect of cultural distance on the Chinese service trade is negative,the influence of the six sub-cultural dimension distance is different,for example,the effect of Long Term Orientation,Masculinity,Power Distance is negative,consistent with expectation while Individualism and Indulgence is positive;the impact of Uncertainty Avoidance is not significant.This results reveal that we should take multiple civilizations as the focal point,make full use of advantage of national policy of "The Belt and Road" to increase trade exchange.with Center and Eastern European so that explore more bilateral service trade potential with other countries along the road.And through strengthening bilateral cultural exchanges,collisions and integration to reduce potential trade barriers and achieve the "The Belt and Road" strategy blueprint.