An Empirical Study of China-Australia Bilateral Trade Potential Based on Gravity Model

Abstract

Based on the use of trade integration index and gravity model, this paper uses the bilateral goods trade data between China and Australia from 2000 to 2019 to analyze the trade status, trade complementarity and trade potential between China and Australia. The results of the study show that the trade scale, trade complementarity and trade potential between China and Australia are constantly expanding. However, from the perspective of trade balance, China has always been in the position of a deficit country, and the deficit is getting larger and larger, especially in terms of primary products. Judging from the trade integration index, China’s trade integration with Australia generally shows an upward trend, indicating that the trade dependence between China and Australia is gradually increasing. Judging from the results of the trade potential analysis, the trade potential between the two countries has not been fully realized, and there is still much room for improvement in bilateral trade relations.