Determinants of bilateral trade between China and Africa: a gravity model approach

Abstract

PurposeThe main purpose of this paper is to analyse the different factors affecting Sino-African trade based on the gravity model, and propose some solutions to improve the problems.Design/methodology/approachThe paper is based on an extended gravity model, including trade agreement and recession as explanatory variables. The impacts of trade agreement and economic recession on Sino-African imports and exports are examined.FindingsThe results show that the product of GDP affects African exports to China significantly and negatively, and affects African imports from China positively. Real exchange rate affects African exports to China positively, and affects African imports from China negatively. Population affect African exports to China significantly and positively, and affect African imports from China positively. Recession have negative effects on both African imports from China and exports to China but is only significant for imports. Agreement affects African imports from China and exports to China positively. Our findings confirm the impact of economic recession, and imply that the structure of African product exported to China should be improved, and trade agreements should be reinforced.Originality/valueThis paper contributes and extends the literature on Sino-African trade by improving the traditional gravity model to include the impact of all trade agreements, and their aggregating effects on trade. The paper also seeks to assess the trade impact of economic recession through a dynamic gravity model approach for which there has been no research done to our knowledge. In this regard, it provides new understanding of the trade pattern between China and Africa, and ways in improving the Sino-African bilateral trade.