Analyzing trade data between Fujian Free Trade Zone and Taiwan based on the gravity model

Using panel data of 19 major trading regions in Fujian from 2001 to 2017, this study employs two directional (import and export) trade gravity models to evaluate the current trade status and trade potential of Fujian. As the closer economic and trade cooperation between the two sides of the Taiwan Straits strengthens, it is of great significance to investigate how the Fujian Free Trade Zone can further promote cross-strait development. The results show that Fujian's imports and exports to Taiwan were in an abnormal state, with imports showing over-trading and exports showing under-trading. The main reason is that Fujian presents trade subsidies in imports, while Taiwan has hidden barriers in exports. This study uses empirical results to emphasize the need for further economic integration and development between Fujian and Taiwan. In terms of population, the Fujian Free Trade Zone needs to focus on introducing talents and industrial integration at various levels. Culturally, Fujian should strengthen cross-strait cultural exchanges, reduce information asymmetry, and lower cultural barriers to promote cross-strait economic and trade development.