Abstract:- then evaluates the effects of international

Abstract:-

Our
topic of project is the effect of trade balance on the GDP of China. We have
taken the data from WDI for the regression purpose. The GDP is taken as
dependent variable and trade balance is independent variable. Where trade
balance is equal to export minus import.

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“Trade balance=export-import”

We
have collected the data from 1976-2015. We regressed the data by taking LOG of
the independent variable. We concluded that the effect of trade balance on the
GDP of china in these years was positive. The results of the regression show
the significance of P-VALUE and T-TEST.

 

 

 

 

 

 

 

 

 

 

 

 

 

Introduction:-

Our
study is based on the eco growth of china since 1976-2015. China has achieved
high economic growth for a prolonged period of time. Academic researchers have
tried alternative explanations for this miraculous growth. This study focuses
on the effect of trade balance on the GDP of china. Adopting unit root test and
cointegrating the variables. The results suggest that two development policies
adopted in china are useful for other developing economies. The two policies
are export promotion and adoption of world technology and business practices.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Literature
review:-

1.     International Trade and its Effects on

Economic Growth in China

This
research discusses the role of international trade in China’s economic growth. He
starts with a review of the evolution of China’s international trade and the
policy that China has taken in trade sectors. This research then evaluates the
effects of international trade on China’s economic growth through examining
improvement in productivity. He applied both, econometric and non-parametric
approaches on a 6-year balanced panel data of 31 provinces of China (2002 to
2007). Both international trade volume and trade structure towards high-tech
exports result in positive effects on China’s regional productivity. The
eastern region of China has been developing rapidly while the central and
western provinces have been lagging behind in terms of economic growth and
participation in international trade. Empirically, International trade affects
economic growth positively in a way that it provides capital accumulation, institutional
advancement industrial structure upgrading and technological progress.
Specifically, it increased the imports of capital goods and intermediate products,
which were not easily available in the domestic market. This may has resulted
in the rise in the productivity of manufacturing. Opening up to the global
market offers an opportunity to trade at international prices rather than
domestic prices. This opportunity provides a gain from exchange, as domestic
consumers can buy cheaper imported goods and producers can export goods at
higher foreign prices. Furthermore, there is a gain from specialization.

2.     Research on the Relationship between Foreign
Trade and the GDP Growth of East China—Empirical Analysis Based on Causality

Li,
Chen and San (2010) mainly focused on the effects of foreign trade on national
economy, and it has been a focus to discuss the theory about the relationship
between foreign trade and economic growth. They took time series relevant
statistical data of GDP and foreign trade from 1981-2008extracted from
provincial yearbooks with co-integration analysis, unit root and causality test
for east China. Variables are gross domestic product, exports and imports of
trade.The result of the tests indicates foreign trade is the long term and
short term source of GDP growth of east China. Total export has positive
relationship with GDP growth, and they are mutually causal.

3.     China’s balance of trade:-

China’s trade
surplus fell to 44.61$ billion in November 2016 from $53.97 billion a year
earlier and below market consensus of $46.3 billion, as exports rose much less
than imports. In November, exports unexpectedly edged up 0.1% from a year
earlier to $196.81 billion, following a 7.3% drop in the preceding month and
beating markets estimates of a 5% fall.

Since 1995 china
has been recording consistent trade surpluses which from 2004-2009 has increase
10 times. In 2015 china’s total trade dropped by 8% as exports became 2.8% and
imports fell by 14.1% due to a weaker speed and falling prices of the
commodities. China recorded deficit with Germany Taiwan, , Australia, south
Korea and south

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