Research On Bilateral Trade Potential Between Laos And China

With the implementation of "the Belt and Road" initiative,the trade between Laos and China has been developing rapidly.However,while the bilateral trade between China and Laos continues to expand,the trade potential of the two countries has not been fully released,and some factors restricting the trade between the two countries still exist objectively.In view of my study in China,this paper aims to put forward relevant policy suggestions based on the analysis of the current situation of bilateral trade between Laos and China and the calculation of the trade potential of the two countries,so as to better promote the development of bilateral trade between Laos and China.On the basis of combing the previous literature,this paper first clarifies the concept and measurement method of trade potential,and analyzes the potential factors that affect the bilateral trade potential of Laos and China.Secondly,after analyzing the current situation of bilateral trade between Laos and China,the potential of bilateral trade is measured through the explicit comparative advantage index and trade complementarity index.Through data analysis,Laos mainly exports resource intensive products to China,and imports labor intensive products and capital intensive products from China.Explicit comparative advantage index shows that Laos has comparative advantages in the export of resource intensive products and China in the export of labor-intensive products and capital intensive products.The results of trade complementarity index show that the complementarity index of Laos and China in resource intensive products,labor-intensive products and capital intensive products is greater than 1.0,with strong complementarity.The above results show that the direct competition between Laos and China in international trade is not fierce.On the contrary,bilateral trade is highly complementary and has great prospects for cooperation.This also determines that the two sides have strong trade potential.Thirdly,it empirically analyzes the bilateral trade potential between Laos and China based on the gravity model.The empirical results show that from 2011 to 2020,the potential index of Laos’ export of resource intensive products to China is between 0.8 and 1.2,with great potential.The potential index of Laos’ imports of labor-intensive products from China is basically above1.2,with small potential.The potential index of capital intensive products imported by Laos from China is basically in the range of 0.8 to 1.2,with great potential.Finally,it puts forward countermeasures and suggestions to promote bilateral trade from Laos and China.From the perspective of Laos,it is necessary to actively promote the transformation of Laos’ industrial structure,especially the upgrading of resource intensive industrial structure;Attach importance to attracting foreign direct investment,improve the business environment and enhance trade convenience;Strengthen domestic political reform and opening up;Actively integrate into the "the Belt and Road" initiative and strive to be an important node of China’s "the Belt and Road" initiative;Use ASEAN and other integration platforms to strengthen trade ties with China and further negotiate to reduce overall tariffs.For China,increase the direct investment in Laos appropriately;Bilateral cooperation at the political,economic and cultural levels at multiple levels;Improve the level of cooperation between China and ASEAN and other regional organizations;Improve the relevant supporting policies of "the Belt and Road".