Degree of Dependence upon Foreign Trade Based on Uncertainty Analysis

Abstract

With the COVID
19 outbreak in the world, countries began to take basic measures such as lockdown and
quarantine, which on the one hand prevented the spread of the epidemic but on the other hand had a significant
impact on the global value chain. As a result, how to reduce the trade dependence of each province and strengthen
the depth and length of the global industrial chain in China has become a hot topic at presen t. In this paper the
influence of economic policy uncertainty on China's import and export trade is discussed based on China's
provincial panel data from 2003 to 2017 and the quantile dynamic panel fixed effect model. The empirical results
show that macro economic uncertainties reduce the dependence on foreign trade of domestic provinces, and have
different degrees of impact on import and export, which are significantly different in different economic periods
and different regions. Specifically, the economi c policy uncertainty will weaken the dependence on foreign trade of
each province, especially in the eastern region than in the central and western regions, and the impact of this
uncertainty is more obvious when the economy is in a downward cycle. However , increasing R&D investment and
FDI in each province will further reduce its dependence on foreign trade. Therefore, it is concluded that the
implementation of economic policies at different stages of the economic cycle needs to be coordinated with
differe nt levels of regional development, and focus on strengthening the R&D investment and increasing foreign
direct investment in each province.