Trade relationship of Vietnam from the perspective of the China-US trade War 2019: A comparison study using the Gravity Model

Abstract

Purpose: This study aims to evaluate the determinants of the trade relationship between the two largest trading partners of Vietnam, the United States, and China. Methodology: This study is completed using the gravity model for time series data from 1986 to 2019. Main Findings: The study found that the economic growth rate plays a crucial role in stimulating the trade flow. Both trade relationships fit with the practical approach of the gravity model, stating that trade flow increases between countries with different income levels. The most important finding of this study lies in the results regarding the impact of the trade war 2019 between the United States and China. The trade war 2019 can be compared with the study in previous 2015 on trade agreements between ASEAN and China produced trade diversion. Implications: As China expands its markets among ASEAN countries, Vietnam should diversify its export markets to improve its export flow in the trade agreement. But export and import correlation compared the effect of US – VN and China – VN change in the period of a trade war after five years. Novelty: This paper has studied the determinants of trade flows between VN-US and VN-CN to provide a detailed comparison. The input and output stream in gravity frame.