This paper uses the expanded trade gravity model to test the decision of trade flow and flow direction between Chinese mainland and Taiwan area,and on the basis,makes a concrete analysis of the trade contact degree between every inland province or city and Taiwan area.

The GDP and per capita GDP of every province,autonomous region or municipality of inland China,the per capita GDP of Hong Kong,absolute distance and the regional cooperation organization in the Pan-pearl River Delta are the main factors that influence the bilateral trade flows,but the influence extent of every factor is different.

This paper, on the basis of observing the changes of trade flow between Hong Kong and Guangdong during the 4 years period of CEPA implementation, studies the influence factors for trade flow between the two places by means of gravity model, and makes an empirical analysis of the effect of trade creation and trade diversion in the area.

Of the variables that affect the bilateral trade flows between the mainland and Hongkong in China the GDP and per capita GDP of every inland province,autonomous region or municipality and the per capita GDP of Hong Kong,the absolute distance and the regional cooperation organization in the Pan-pearl River Delta are the main factors,which also vary in their effect on the bilateral trade flows.

On the basis of relevant theories and methods of trade gravity model, this paper tests and measures the bilateral trade flows and potential between every province, autonomous region or municipality directly under the Central Government in China mainland and Taiwan.