Factors Influencing Trade Relations Between Yemen and China

Abstract This study contributes to the existing empirical research by investigating the factors affecting bilateral trade between China as an emerging economy and Yemen as a developing country. Using annual bilateral trade data from 1990 to 2014, this study provides in-depth insights into the pattern of bilateral trade and the factors driving export and import flows between China and Yemen. This study has the advantage of including a new factor in the trade regression analysis to indicate the impact of cultural cooperation on trade using the number of Yemeni students enrolled in Chinese higher education institutions and universities on an annual basis during the period under investigation. This study also includes other control variables, such as the GDP of China and Yemen, the bilateral exchange rates of the Chinese yuan in terms of the Yemeni currency (YER), and two dummy variables to indicate the Arab Spring, the Yemen crisis, and the Asian crisis and their impact on bilateral trade. The results indicate that China and Yemen expanded their trade relations, and export and import flows increased rapidly during the study period, with fluctuations observed during the crisis years.