Research On The Influencing Factors And Potential Of China-India Bilateral Trade

Although the trade conflict between the US and China came to an end after the China-US Economic and Trade Consultations,the trade friction will not stop there.In order to reduce the impact of US trade restrictions,China must take precautions.On the one hand,China must continue to deepen supply-side structural reforms,carry out industrial upgrades,expand domestic demand,and provide more high-quality products to meet the diverse needs of the people;on the other hand,China must explore overseas markets and diversify risks.India is the second most populous country after China and the second largest developing country in the world.Though the level of trade between the two countries has achieved notable results,India's position in China's trading partners does not match its market size due to its population and economic scale.India should be an important destination for China's trade expansion.Therefore,this article analyzes the influencing factors of China-India trade and estimates the trade potentials.This article takes China-India trade as the research object,combines the actual situation of China-India trade with related trade theories,conducts a qualitative analysis of the factors affecting China-India trade,and selects relevant variables to conduct an empirical analysis of the factors that influence China-India trade.In order to measure the potentials of Sino-Indian trade,this paper selects variables based on the analysis of the factors affecting Sino-Indian trade,constructs a stochastic frontier gravity model and a trade inefficiency model,and calculates the trade potentials and expandable trade potentials.Finally,some suggestions are put forward based on the current situation of China-India trade.The main research conclusions and innovations of this paper are as follows:Firstly,this paper reviews the domestic and foreign literature from the perspectives of Sino-India trade,factors affecting Sino-India trade,trade potentials,and Sino-India trade potentials through sorting out the domestic and foreign literatures,and reviews the domestic and foreign literatures to analyze the existing shortcomings of the current research and find the entry point for the research in this paper.Then it introduces the related theoretical foundations.This article sorts out comparative advantage theory,factor endowment theory,intra-industry trade theory,overlapping demand theory,and stochastic frontier gravity model.Secondly,this article uses relevant trade data to sort out the history of China-India trade development and current trade characteristics,and analyzes the problems existing in China-India trade.This article finds that the economic and trade exchanges between China and India are strongly related to bilateral political relations,which are roughly expressed as "Cold politics with Cold economy,and Hot politics with Hot economy." When analyzing the status quo of China-India trade,this article finds that although China and India have achieved notable achievements in bilateral trade development,but they still do not fit the market size and economic development level of the two countries;the trade imbalance is serious and trade frictions continuing.By analyzing of the trade structure between the two countries,we find that the trade between the two countries is concentrated in primary products and manufactured products,and is developing from resource-intensive to labor-intensive.In terms of the competitiveness and complementarity of China-India trade,the competitiveness and complementarity of the two countries co-exist,and they mainly manifest themselves as complementarity.Thirdly,from the economic and non-economic perspectives,this article selects economic factors such as economic development level,difference in demand,level of economic openness,trade barriers and other non-economic factors such as population size,geographical distance,bilateral political relations,language and cultural background,and analyzes the factors that influence Sino-Indian trade.Based on the availability and measurability of the data,this article expands the traditional gravity model,constructs a model of Sino-Indian trade influencing factors,and conducts empirical regression.It is found that the regression conclusions are basically in agreement with the theory.The combination of qualitative analysis and empirical regression on the influencing factors of Sino-Indian bilateral trade is an innovation.Fourth,in order to measure the potential of China-India trade,this paper selects China's top 20 trading partners as a research sample.Based on the analysis of thefactors affecting China-India trade,the relevant variables from 2001 to 2018 are used to build a random frontier gravity model and trade.Inefficient model,The empirical analysis affects the trade potentials and trade inefficiency,and also calculates China-India trade efficiency,and uses the actual trade volume between China and India to calculate the China-India trade potentials and expandable trade potentials.This article also selects the main trade commodities of China and India,as well as those that are competitive and complementary,and uses the model of total trade potentials to measure the trade potentials of China and India from the perspective of subdivided commodities.This article makes a horizontal and vertical comparison of the trade efficiency of China and India as a whole and the main commodities separately,and measures their trade potentials,which is innovative.Finally,according to the status quo of Sino-Indian trade,the empirical return to the factors affecting Sino-Indian trade,and the estimation of trade potentials,and combined with the actual situation,we provide some suggestions to tap the trade potential and promote the economic and trade development between the two countries.The two countries should strengthen communication politically,increase mutual trust,and promote economic and trade exchanges through political exchanges;continue to expand the scale of bilateral trade,increase China's level of imports from India,and reduce the gap between China and India to increase trade levels and ease trade friction.In light of the competitiveness and complementarity of the trade between the two countries,they should optimize the trade structure and increasing trade efficiency,and increasing the level of intra-industry trade while expanding inter-industry trade.They should continue to deepen reform and opening up,promote economic development,and promote levels of production and consumption of the two countries.The two country should enhance the level of economic cooperation,take the "Belt and Road" and the "Bangladesh China India Myanmar economic corridor" as an opportunity to promote the construction of infrastructure levels,and take the RCEP negotiations as an opportunity to promote the level of trade facilitation in China and India.