Characteristics and Determinants of the Proportion of China’s Trade by Air

Lu Jian 1, Zhang Long 2 and Yang Haoqing 3
1,2 School of International Business, Southwestern University of Finance and Economics (SWUFE)
3 GE Medical Systems Trade & Development Shanghai Co. Ltd.

Abstract: Based on the China Customs Database and the China Industrial Enterprises Database, this paper estimates the proportions of imports and exports by air of Chinese firms and variables that may influence such proportions. Through OLS regression and seemingly unrelated regression (SUR), this paper analyzes the possible determinants of the share of trade by air. Our findings suggest that the TFP of firms is positively correlated with the share of trade by air. The ratio of value-added in exports is positively correlated with the share of imports by air and negatively correlated with the share of exports by air; the average distance of transport is significantly positively correlated with the share of trade by air in full-sample and grouped regressions. Rising TFP increases the share of imports and exports by air the most for processing trade firms, particularly for firms in the eastern region and foreign-funded firms. An increase in the ratio of value-added in exports increases the share of imports by air the most for general trade firms, and also significantly influences the use of air transport by firms in the eastern region and foreign-funded firms. These conclusions offer valuable policy references for promoting trade in various parts of China and especially the inland regions.

Keywords: air transport, trade, SUR ( seemingly unrelated regression )

JEL Classification Codes: F19, D29, C13
DOI:1 0.19602/j .chinaeconomist.2019.3.0819602/

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