Abstract:
Analysis of the trade potential and influencing factors between China and Sri Lanka is conducive
to scientifically grasping the trade trends between the two countries since the joint construction
of the Belt and Road Initiative, and providing references for promoting the high-quality development
of China-Sri Lanka economic and trade cooperation. Based on the panel data of
bilateral trade between China and Sri Lanka from 2000 to 2024, this paper employs the stochastic
frontier gravity model and trade inefficiency model to analyze the bilateral trade efficiency,
trade potential, and their influencing factors. The research results show that GDP has a positive
impact on trade volume, while population and distance have a negative impact. Among the trade
inefficiency factors, China’s direct investment in Sri Lanka, government efficiency, and whether
a free trade agreement has been signed have a positive relationship with trade volume. There
is considerable room for expansion in China-Sri Lanka trade, and the trade potential remains
to be further tapped. Therefore, China and Sri Lanka should enhance political mutual trust and
policy communication, optimize the bilateral trade structure, increase investment and development
efforts, accelerate the construction of bilateral free trade areas, and carry out multi-level
cultural exchanges.
