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Would Trade Facilitation Promote China's InterProvincial Trade by Trade Creation?——Evidence from the Survey on the Chinese Trade Facilitation

【Authors】
CUI Xinsheng, GUO Longfei & LI Fang
【WorkUnit】
CUI Xinsheng, GUO Longfei (University of International Business and Economics, 100029)LI Fang (China National Intellectual Property Administration,100088)
【Abstract】

This paper selects the companies-recognizable and provinces-identifiable variables to measure the trade facilitation in China based on the investigation results of Chinese provincial trade facilitation and studies the impact and mechanism of provincial trade facilitation on import, export and inter-provincial trade by using the gravity model, based on the theory of trade creation and trade diversion, with trading ports history as the instrumental variable. Tariffs and other factors controlled, the result shows that, though it leads to trade diversion, the improvement of provincial trade facilitation is able to promote greatly the foreign trade of provinces in China, and to a certain extent boost inter-provincial trade. Trade facilitation has varying effects in different areas according to the pace and effect of China's opening-up and pushes up the economic integration of provinces.

JEL: C33, F13, O24

【KeyWords】
Trade Facilitation, Trade Creation, Trade Diversion, Inter-Provincial Trade, Two-Stage Least Squares (2SLS)