Abstract
China and Southeast Asian nations free trade area was formally established on January 1, 2010. By the end of year 2011, China’s foreign exchange reserves exceeded 3200 billion US dollars. Trade gravity model originates from the law of universal gravitation. Domestic researchers have made empirical studies using trade gravity model of trade between China and Southeast Asian nations. There are also studies of foreign direct investment or Chinese tourist arrivals in Vietnam, using gravity model. However, neither tariff and foreign exchange reserves are taken into consideration in studying China and Southeast Asian nations free trade area, nor gravity model is used in analyzing China’s direct investment and tourist arrivals in Southeast Asian nations. Using econometrics software “Eviews 5.0” and based on a panel data from year 2000 up to 2008, this paper constructs a gravity model, the independent variables of which are gross domestic product per capita of CAFTA countries, foreign exchange reserves of CAFTA countries, squares of southeast Asian nations, and distance between China and southeast Asian nations. And quantitative relationship is made between independent variables and China’s direct investment in Southeast Asian nations, import from Southeast Asian nations, as well as arrivals of Chinese visitors in Southeast Asian nations.
Highlights
CASEAN was established on January 1, 2010
Neither tariff and foreign exchange reserves are taken into consideration in studying China and Southeast Asian nations free trade area, nor gravity model is used in analyzing China’s direct investment and tourist arrivals in Southeast Asian nations
Quantitative relationship is made between independent variables and China’s direct investment in Southeast Asian nations, import from Southeast Asian nations, as well as arrivals of Chinese visitors in Southeast Asian nations
Summary
CASEAN was established on January 1, 2010. By the end of year 2011, China’s foreign exchange reserves exceeded 3200 billion US dollars. What’s the relationship between China’s foreign exchange reserves and Chinese tourist arrivals in as well as its import from Southeast Asian nations? Taking foreign exchange reserves into consideration and using gravity model, this paper studies China’s direct investment and tourist arrivals in ASEAN nations. Using econometrics software “Eviews 5.0” and based on a panel data from year 2000 up to 2008, this paper constructs a gravity model, the independent variables of which are gross domestic product per capita of CAFTA countries, foreign exchange reserves of CAFTA countries, squares of southeast Asian nations, and distance between China and southeast Asian nations. Quantitative relationship is made between independent variables and China’s direct investment in Southeast Asian nations, import from Southeast Asian nations, as well as arrivals of Chinese visitors in Southeast Asian nations.
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