Forecasting Trade Potential Between China and the Five Central Asian Countries: Under the Background of Belt and Road Initiative

Abstract

Under the background of the Belt and Road Initiative, this paper constructs a measurement equation for China’s exports to the five Central Asian countries based on the gravity model of international trade for the purpose of forecasting China’s future export growth potential. This paper selects China’s GDP, trading partners’ GDP, geographical distance, borders, railway freight volume, population growth rate and WTO as explanatory variables, based on what we construct multiple measurement equations. We use panel data from 2010 to 2017 to perform multiple regression analysis under the random effects model. We find that the model using China’s GDP, trading partners’ GDP, geographical distance, and borders as explanatory variables has a higher degree of fitness and each key explanatory variable is significant. Basing on the obtained measurement equation and the World Bank’s forecast of the economic growth of various countries, we forecast that China’s exports to the five Central Asian countries can maintain stable growth in the short term. By 2022, China’s total exports to the five Central Asian countries will reach 2,353,510.82 million USD which will be 1.09 times that of 2017.