Influence of China’s trade imbalance on economy in the background of great nation

Chong Qian¹, Zhan-ao Wang²

¹First Author, City College of Wenzhou University, Wenzhou city, Zhejiang province, China, 325035

²Corresponding Author, City College of Wenzhou University, Wenzhou city, Zhejiang province, China, 325035

The developed countries have been accusing China for its trade surplus for a long time. In order to verify the influence of trade imbalance on the economy, our research applied techniques like error correction function, Granger test and impulse response function. The research outcomes manifest that: the influence of trade imbalance on the economy is not significant. On the contrary, the economy imposes certain impact on trade imbalance. Both imports and exports significantly promote the development of economy. Furthermore, imports remarkably facilitate exports. This can also be attributed as the reason of China’s trade deficit before 1992.