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<p>Expanding trade volume fosters stronger connections between countries and plays a vital role in promoting economic development. This study aims to explore intra-trade (IT) between China and South Asian countries from 2000 to 2022, contributing to the literature by examining both unidirectional and bidirectional trade relationships. Additionally, by employing the Panel-Corrected Standard Errors (PCSEs) model, the research assesses the influence of business cycles and trade openness on intra-trade. The findings reveal that, within South Asia, only Pakistan and India maintain strong two-way trade relationships with China. Moreover, synchronized business cycles and trade openness are found to significantly enhance intra-trade. Among the control variables, higher inflation, real interest rates, population growth, and language barriers are associated with reduced intra-trade. Additionally, the distance-adjusted growth negatively impacts IT. The study also uncovers bidirectional causal relationships between intra-trade and key variables such as trade openness, business cycles, and distance-adjusted growth. These results offer meaningful insights into the dynamics of regional trade integration and underscore the structural and geographical barriers to sustainable bilateral trade development. To enhance intra-industry trade, policymakers should prioritize regional economic integration through synchronized business cycles, liberalized trade policies, and the establishment of comprehensive free trade agreements. Efforts should focus on reducing non-tariff barriers, improving trade-related infrastructure, and lowering overall trade barriers to strengthen China’s trade ties with all South Asian countries.</p>

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Economic integration and intra-trade between China and South Asia: The role of business cycles and trade openness

  • 期刊论文

  • 发表日期：

    2025年9月15日

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  • Umer Shahzad,
  • Changhong Miao

摘要

Expanding trade volume fosters stronger connections between countries and plays a vital role in promoting economic development. This study aims to explore intra-trade (IT) between China and South Asian countries from 2000 to 2022, contributing to the literature by examining both unidirectional and bidirectional trade relationships. Additionally, by employing the Panel-Corrected Standard Errors (PCSEs) model, the research assesses the influence of business cycles and trade openness on intra-trade. The findings reveal that, within South Asia, only Pakistan and India maintain strong two-way trade relationships with China. Moreover, synchronized business cycles and trade openness are found to significantly enhance intra-trade. Among the control variables, higher inflation, real interest rates, population growth, and language barriers are associated with reduced intra-trade. Additionally, the distance-adjusted growth negatively impacts IT. The study also uncovers bidirectional causal relationships between intra-trade and key variables such as trade openness, business cycles, and distance-adjusted growth. These results offer meaningful insights into the dynamics of regional trade integration and underscore the structural and geographical barriers to sustainable bilateral trade development. To enhance intra-industry trade, policymakers should prioritize regional economic integration through synchronized business cycles, liberalized trade policies, and the establishment of comprehensive free trade agreements. Efforts should focus on reducing non-tariff barriers, improving trade-related infrastructure, and lowering overall trade barriers to strengthen China’s trade ties with all South Asian countries.