An Econometric Model of the Relationship between Foreign Trade and Economic Growth in China

In order to research the econometric model of the relationship between foreign trade and economic growth in China, it made an empirical study according to the sample with the corresponding data from 1990 to 2007 in China. The results of Granger causality test showed that foreign trade had Granger causality with economic growth. The results of unit root test showed that the time series were stable after 1st difference. The results of cointegration test showed that there was a long-term stable equilibrium relationship between foreign trade and economic growth. If the value of foreign trade increases by 1 percent, the economic will increase by 0.65 percent. With the error correction model, the results showed that the short-term fluctuation of foreign trade would lead to the change of economic growth in the same direction. If economic growth deviates from the long-term equilibrium value, it will be corrected by 14 percent next year.