Abstract Following Schumacher (2003) gravity model, this paper tests the effects of China’s bilateral service trade on home market, it is found that the Home Market Effect exists in China’s overall services trade, and labor endowment promotes China’s service trade. In the department research, the Home Market Effect exists in six departments of eleven departments, there is no Home Market Effect exists in four departments, Home Market Effect in one department is not significant. This shows that Home Market Effect has become the most important source of comparative advantage of China’s service trade. The policy implications are that China’s service trade policies should tilt to domestic market, regulate market behavior, cultivate the economic scale of service enterprises, and create the conditions favorable to the Home market effect.
2015, Vol. 32 
