Abstract: In recent years, how political interests and decision-making affect economy has become the focus of the scholars’ attention and controversy. Based on the perspective of China, this paper uses the annual data of 96 countries from 1992 to 2015 as the samples to empirically examine the interation among bilateral political distance, trade flows and cultural differences. The conclusions are as follows. Firstly, political distance significantly reduces bilateral trade flows between China and its trading partners and bilateral cultural differences exacerbate mutual political risks and significantly increase the sensitivity of bilateral trade to political distance (partial effect). Secondly, the above relations present different characteristics in different periods, especially in the stage of economic recovery after the crisis. However, the trade between China and its partner countries in independent of bilateral political distance. Finally, while subdividing the trade products involved, it is found that the trade damage effects mentioned above only exist in the trade of four kinds of products including “food and live animals”, “manufactured goods”, “machinery and transport equipment” and “miscellaneous manufactured articles”.
Key words: political distance; trade flow; cultural difference; fixed effects model