Application of gravity model to explain the effects of diplomatic relations on China’s service trade

Cai-Xia Songa, Cui-Xia Qiao* & Chien-Chiang Leeb a School of Economics, Shandong Normal University, Jinan, Chinab School of Economics and Management, Nanchang University, Nanchang, ChinaCONTACT Cui-Xia Qiao xia_xia008@126.com School of Economics, Shandong Normal University, Jinan 250300, ChinaABSTRACTUsing the data of China’s service trade and diplomatic events with 45 countries, this paper examines the effects of diplomatic relations on service trade based on the gravity model. Through an empirical analysis, the results proved that good diplomatic relations can significantly promote the export of China’s service trade and that the effects of diplomatic relations on trade have a clear distinction regarding different political positions. Our results support the view that diplomatic relation does an important role in international trade.