DETERMINANTS OF CHINA’S TRADE WITH AFRICA: A GRAVITY MODEL APPROACH
Abstract
This paper seeks to examine the determinant of bilateral trade between China and Africa using the gravity model of international trade. Panel data was used for ten African countries from 2000 to 2016. The generalized least squares random effect estimation technique was employed. The study used the standard gravity model and integrates population, exchange rate and strategic partnership. The study finds out that China’s GDP, Africa’s GDP, population of Africa, geographical distance, exchange rate and strategic partnership have significant impact on China’s trade Africa. China’s population is not a determining factor of trade flow with Africa. The study recommends that to increase bilateral trade flow between the two economies, there should be a robust strategic trade partnership that will eliminate most barriers to trade thereby creating easy flow of goods. African countries closer to China should take advantage of the proximity and trade more and Africa should export more of finished goods to China which will increase its GDP.
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