The purpose of this paper is to examine the effects of gravity variables and trade costs on China's export margins.
Following the structural gravity model with firm heterogeneity, the paper measures the extensive margins and intensive margins of China's export across 46 export destinations and estimates the linkage between export margins and its potential determinants.
The empirical results confirm the gravity relationship hold for bilateral trade and export margins. Furthermore, trade costs have different influence on extensive margins and intensive margins as the structural gravity model with firm heterogeneity expected. The paper also shows the rapid growth of China's export is mainly along the intensive margins which are increasing in fixed cost for export.
The paper contributes to the measurements of China's export margins and the empirical research on effects of trade liberalization on China's foreign trade.
