Faculty Publications  | Volume 2     |    Number 2   |  July-December 2020   |    Pages 27 – 40

Received: July 2020   |  November 2020

SUMMARY

The general idea of bilateral economic relation is to enhance the welfare by increasing the trade in goods and service and flows of production factors. It is well-known from classical trade theory, which is at least based on the work of Ricardo and Heckscher-Ohlin, that the abolition of all kind of trade barriers and all reductions of transaction costs increases the efficiency of all involved trading countries and the overall welfare in all concerned countries. In so far, free trade is in general a first best solution. According to gravity model of trade, China is a big partner of Cambodia in term of population and GDP. China has total population of 1,420 million habitants, where the Chinese language is use the most in the world. China also has experience of economic growth of 7.5% over last ten years. In 2017, China has the total GDP of $25 trillion (at PPP) which the largest GDP in the world (at current price is $14 trillion, the second largest).