Bilateral political relations, space spillovers and the import expansion of China’s bulk commodity

Abstract

The stability of bulk commodities imports is crucial to the development and stability of the country’s economy. Because its political attribute is more significant than other commodities, the trade of bulk commodities is more easily affected by bilateral political relations. However, there are only few studies examine the impact of political relations between countries and their spatial spillovers on bulk commodities’ imports. Based on “United Nations (UN) Voting General Assembly Voting Data” and “China Import and Export Statistics Data” from 1996 to 2014, this paper empirically examines the influence of the spatial spillover of China’s political relations with countries other than potential importing countries on the import expansion of China’s bulk commodity from the potential importing country. The results show that the improvement of bilateral political relations between China and other countries has a negative spatial spillover effect on the import of bulk commodities. However, this negative effect will be changed as China starts to establish a sound bilateral political relation with the potential importing country. Meanwhile, the more significant the political attributes of commodities, the greater the negative effect of spatial spillover. The import expansion of commodities with significant political attributes requires an improvement in direct bilateral relations.