Determinants of forest product group trade by gravity model approach: A case study of China

Abstract The study emphasised the basic factors which are responsible for influencing China's forest product group trade. The gravity model approach is applied on forest product group 44, 47, 48, 49 and 94 by using panel data from period 2001 to 2018. Panel unit root test shows that factor affecting variables are stationary for all models while, the Hausman test is used for suitable model selection. Results revealed that GDP and GDPC have a positive impact on trade, whereas distance has an inverse impact on trade. Other factor used in the study also has a significant effect on the China trade. The forest trade is significantly affected after the global economic crises and countervailing/antidumping duties imposed by USA and other countries on China. Similarly, APEC and OECD have significant impact on China bilateral trade of forest products. This study concluded that it would be better to promote exports and import to countries having large economies or short distance countries. It is suggested that by promote Chinese language to partner countries can increase the trade flow of China's forest product group trade.