Who benefits of trade with china? Examining the effects of free trade agreements on trade flow with Сhina using an adjusted gravity model

Abstract

China has numerous free trade agreements with various countries. In this research it will be examined who benefits from those free trade agreements. The sample includes 27 countries trading with China but 13 of these countries have signed a free trade agreement with China, or roughly half of all the available countries in our sample. The sample data are from 2001 – 2017. An adjusted gravity model and a linear regression was carried out. While those countries that have made free trade agreement with China experienced modest or no increase in export to China, China itself experienced significant increase in export to its free trade partners after the agreement took place. In comparison, we carried out a linear regression of the total 27 countries where the trading countries experienced increase in export to China and China itself experienced increase in export to these countries as well. It is therefore safe to conclude that China is a beneficiary of free trade agreements at least as much as it´s trade partners.