Research on the Relationship between Sino-EU Trade and Economic Growth

Abstract

Abstract. The dependence on foreign trade of China and European Union are both at a relatively high level, and the space for Sino-EU trade is still enormous. So, this paper adopts cointegration analysis and error correction model to study the relationship between Sino-EU trade and economic growth from a long-term and short-term perspective respectively. Cointegration analysis shows that: whether it is Sino-EU trade and China's economic growth or Sino-EU trade and EU's economic growth, there exists long-term cointegration relationship between them. Sino-EU trade plays a more important role in economic growth of China than its role in stimulating economic growth of European Union. Error correction model demonstrates that Sino-EU trade may deviate from its long-run equilibrium with economic growth in the short run.