Trade Elasticity of China

This paper presents a simple methodology to approximate trade elasticity of China by only using her 2016 firm-level trade data, wherein the exporting country is replaced by the country' most populous destination (a base country) when calculating the export intensity. With Hong Kong being the base country, the estimated trade elasticity to China exports is theta = 8.78 (if sigma = 6.56). This methodology also provides a way to examine the relative "resistance" of a country's trading partners while taking them as the base countries: the larger their estimated trade elasticity, the greater their resistance to trade.