Trade Potential Between Pakistan And China: A Gravity Model Approach.

Abstract

This study analyzes the trade potential between Pakistan and China using the Gravity Model of Trade. The model evaluates bilateral trade flows by considering factors such as GDP, distance, and population. Using panel data, the study compares actual trade with predicted trade to identify potential gaps. The results indicate that although trade between the two countries has grown significantly, it still remains below its full potential. Key constraints include trade barriers, limited diversification, and logistical challenges. The findings also highlight the positive role of regional connectivity initiatives in enhancing trade prospects. The study concludes by suggesting policy measures to improve trade efficiency, reduce barriers, and strengthen bilateral economic relations for sustainable growth.