The Influencing Factors Of China’s Intra-industry Trade With Major Trading Partners In Africa

Twenty-first century international trade has experienced a great deal of technological advancement,dynamic consumer preferences,complex trade policies and multi-billion dollar transactions taking place every year in both emerging and developed economies.Similar trading partners especially advanced countries’ simultaneous import and export trade within an industry is explained mostly by intra-industry trade(IIT),a modern international trade theory.Intra-industry trade is evolving to be pivotal in the understanding trade between developing countries and unequal economies due to increasingly affluent consumers in the developing countries expressing preferences for product variety similar to their counterparts in highincome countries.Fewer studies as investigated into the phenomenon of IIT for developing countries including Africa.This paper mainly studies the extent of intra industry trade and its influencing factors between China and Africa’s major trading partners.Firstly,this paper reviews the theoretical basis of intra industry trade,including comparative advantage theory,factor endowment theory and wild goose theory,and combs the research literature related to intra industry trade.Secondly,it studies the influence mechanism of various factors such as GDP,exchange rate level,national distance and foreign direct investment on intra industry trade.Thirdly,using the panel data of China and 17 African trading partner countries from 2007 to 2019,the gravity model of domestic industry trade and influencing factors between China and African trading partners is established,and the panel corrected standard error(PCSE)method is used to calculate the impact of various influencing factors on domestic industry trade between China and African trading partners.The results show that China’s GDP and FDI to African trading partner countries significantly promote intra industry trade,and the distance between China and African trading partner countries,real exchange rate and inland geographical location of African countries significantly inhibit intra industry trade.The dissimilarities in GDP per capita,degree of trade openness and innovative payment systems of African trading partner countries have no significant impact on intra industry trade.Finally,this paper puts forward relevant countermeasures and suggestions.China should expand its one belt,one road initiative,to attract more investment from Chinese enterprises.For African landlocked countries,they should cooperate with Chinese enterprises to strengthen infrastructure construction,minimize the negative impact of geographical location on intra industry trade,and provide good basic conditions for intra industry trade.African countries adopting innovative payment systems can consider seeking technical support from Chinese enterprises to improve payment efficiency and promote the level of intra industry trade.