Empirical Analysis of the Impact of Trade Facilitation on China's Foreign Trade- based on Panel Data Analysis of Countries along the Belt and Road

Abstract

Since China proposed the Belt and Road Initiative in 2013, new changes have taken place in China's economic and trade relations with countries along the routes. China has helped countries along the routes improve their economic and trade conditions through various diplomatic means. However, in recent years, the rise of trade protectionism, mainly in the United States, has made China's foreign exchanges, cooperation and trade difficult, making trade facilitation conditions appear particularly important in the complicated international competition. Therefore, I start from this initiative to explore the impact of trade facilitation on China's trade. This paper selects 41 trade-related indicators from the World Economic Forum, and classifies all indicators into four first-level indicators: transportation infrastructure, government regulation, financial services and e-commerce. Then principal component analysis is used to concentrate and determine the weight of all indicators, among which the weight of transportation infrastructure is the highest. Then, trade facilitation in countries along the BELT and Road Initiative from 2007 to 2017 was measured and presented numerically. Then, other trade-related indirect factors were added, and panel data were used to build a multiple linear regression model to analyze the relationship between the level of trade facilitation of each country and the volume of trade between China and the country. Through collecting, sorting out and empirical analysis of the data, it is concluded that the level of trade facilitation measured in this paper has obvious regional distribution characteristics. On the whole, the level of trade facilitation in East Asia, Southeast Asia and Europe is higher. At the same time, there is a positive correlation between the trade facilitation level of the host country and the trade volume between China and the host country. Finally, some policy suggestions are put forward based on relevant results.