The Analysis Of The Impact Of International Political Conflict On Trade

The influence of the international political conflict on the economy has been drawn wide attention of scholars.In recent years,political conflicts occurred frequently between China and its neighboring countries,but the empirical analysis on this issue remains limited.Most of the current studies argue that international political conflicts exert negative influence on export trade.However,considering the importance of export trade,the negative influence may not be significant or may be weakened or offset by other factors.As an important trading partner between China and Japan,the world's top three economies,however,they have significant differences in history and territory,so whether the Sino-Japanese political conflict affects the bilateral economy is a problem to be studied in this paper.Based on Diaoyu Islands and Yasukuni Shrine events,this paper studies the influence of China-Japan political conflict on trade by conducting empirical analysis,analyzing monthly data of Japanese exports to China,the United States,Korea and other regions of the merchandise trade.The results of basic identification,DID approach and sample paired test indicated that the outbreak of the China-Japan political conflict brought a rapid reduction in bilateral trade,and short-term has relatively obvious effects.Specifically,in the first month after the conflict,the growth of exports from Japan to China fell to about 80%to 90%of exports from Japan to the United States,South Korea and the rest of the world except China.In heterogeneity analysis,it was found that the trade of intermediate and capital goods suffered most in the conflict,while consumer goods are not significant.However,the short-term effect we found in the political conflicts showed that close economic ties can relieve the effects of political conflicts to some extent,and the results of heterogeneity analysis showed that Chinese consumer have high brand loyalty to Japanese products.