The Impact Of China’s Aid To Developing Countries On Bilateral Trade

As an important way of economic cooperation between countries,foreign aid has brought about economic effects that have become the focus of many scholars,among which the most concerned is the impact on bilateral trade.Foreign scholars have conducted many theoretical studies and empirical analyses on the relationship between aid and trade.However,due to the difficulty in obtaining Chinese aid data,domestic studies on this aspect are insufficient.However,as a responsible major country,China has been committed to promoting global economic development and national cooperation,and helping other countries’ economic development by signing trade agreements and providing economic and technical assistance.In recent years,increasing amount of the construction of Chinese aid developing countries,the aid and trade mechanism of the inner relation between the increase,the necessity of more research assistance mechanism linking with the bilateral trade between the topic.On the basis of the theoretical guidance,the state can better carry out China’s foreign aid activities,increase trade links between donor and recipient countries,and promote common development.This paper mainly studies this problem from the theoretical and empirical aspects.The author makes use of the data obtained from Aiddata,OECD and other databases to summarize the development of aid.Then,from the theoretical perspective of the predecessors,this paper introduces the political economy theory of foreign aid,and emphatically introduces five trade effect theories of foreign aid: Trade cost effect,Export diversification effect,trade liberalization effect,system effect and international income transfer effect.The author will start with a theoretical study of the possible impact of aid on bilateral trade.In terms of empirical analysis,this paper selects the data of 31 sample countries from 2000 to 2014,and constructs a three-level trade attraction model with the total trade volume,import volume and export volume as the explained variables.The first-level model only contains basic explanatory variables;The second level of the model is based on the basic model to join the WTO as a control variable to study whether joining the same preferential trade agreement will have an impact on the effectiveness of aid.The model at the third level adds institutional quality variables of recipient countries on the basis of the model at the second level.it can explore whether country heterogeneity will make difference in aid effectiveness.This paper draws the following main conclusions :(1)there is a significant positive relationship between the amount of China’s foreign aid and the import,export and totaltrade of China to recipient countries.Foreign aid can promote trade,and the implementation of the policy of "aid for trade" is correct and effective.(2)in the samples in this paper,there is no u-shaped relationship between China’s foreign aid amount and the import and export volume,that is,there is no valve value.When the amount of aid exceeds this value,the effect of aid on bilateral trade will become negative.(3)the GDP and population of China and recipient countries will have a positive promoting effect on the trade volume,which is significantly inconsistent in different models.(4)the distance between China and recipient countries has an inhibitory effect on the trade volume,especially in the export model between China and recipient countries,the inhibitory effect is significant.(5)the aid provided to recipient countries that have joined the same preferential trade agreement with China can have a greater positive impact on the total bilateral trade between the recipient countries and the donor countries,and has no significant impact on the import volume and export volume.(6)the transparency of the governments of recipient countries contributes to their import and export trade with China.In this paper,based on the above empirical analysis in the final conclusion,combining the current situation of China’s foreign aid,draw lessons from the experience of other countries foreign aid policy management of China’s foreign aid activities carried out respectively from aid mode,system environment,aid management strategy,puts forward some Suggestions for regional economic cooperation four aspects,namely,(1)the way adhere to mobilizing aid for developing countries to provide aid.(2)improve the institutional environment and make greater use of market means to manage the market economy;(3)We will improve the management system of foreign aid projects,establish a foreign aid supervision and evaluation system,make the aid supervision system more scientific and systematic,and improve the transparency of foreign aid;(4)further expand the scope of tripartite cooperation and carry out tripartite cooperation with other developing countries and the private sector.