A Positive Study On Trade Effects Of CJKFTA

Regional Economic Integration is one of the main tendency of world economic development today. China, Japan and Korea are neighbors in geography and have similar language and culture. They have strong complementarity in economic structure and are dependent on each other. It is possible and inevitable to establish good economic cooperation relationship among them and to promote their economic development. Also, this is a good try for China to establish China-Japan-Korea FTA (CJKFTA). Developing country's regional economic integration is usually unsuccessful. To develop regional economic integration between developing countries and developed countries may be a good choice for China.In this paper, we will have an empirical study on trade effect of CJKFTA. Here, the research objective is limited to good trade. We also care about its prospects. The focus problems needed to be solved are as folio wings: 1.From the angle of trade, whether there is complementarity in the trades among these three countries and where the advantage of each country lies; 2.How about the economic and trade influence on China after CJKFTA has set up and how about the influence on the trade between China and member countries; 3.Whether it is a good choice for China to set up CJKFTA; 4. Which kind of trade policy and industry policy China should choose in the future FTA.On theoretical frame and realistic foundation, we have an empirical study on the trade effect of CJKFTA. The paper includes seven chapters.Chapter One is the openness of this paper. It introduces research background, research objective, research train of thoughts and logic frame, its weak points and possible theory innovations etc.Chapter Two is the theoretical frame of CJKFTA, including the Customs Union Theories with partial equilibrium or general equilibrium, the FTA Welfare Theories with one-country model or two-countries model.Chapter Three analyzed the realistic foundation of CJKFTA, focusing on the intensity of economic relations among these three countries. We classify a large amount of primitive trade data in the past 20 years and sum up the whole trends oftheir trade patterns from economic openness degree, the proportion of trade in the world trade and CJKFTA trade, trade intensity, trade cooperation, FDI cooperation, and etc.Chapter Four calculated and interpreted the comparative advantage, competitive advantage and the patterns of intra-industry trade of each member country, in which we make use of some empirical methods such as RCA index, TC index and GL index and deal with a large amount of primitive trade data in 1980-2002 with them. We found that there is a very strong complementarity in economics among China, Japan and Korea, in which Japan is a developed country with outstanding advantage in capital and technology, Korea is an new industrialized economy with a certain of advantage in capital and technology, and China is a big developing country with advantage in labor and market. They are dependent on each other in economic development.Chapter Five analyzed how the setup of CJKFTA has influence on Chinese economic and trade and on main trading patterns among the member countries. First, we made use of gravitation model to show the trade effect of CJKFTA; Then we analyzed the statistic effect and dynamic effect of CJKFTA with partial equilibrium method; Finally, we considered CJKFTA as a cooperative game in view of game theory. The results are as folio wings: China will have largest import from and export to member countries while Japan and Korea also will have some increase in trade; China will acquire remarkable dynamic effects, especially FDI effect. There will have a huge increase in FDI flow from both member countries and non-member countries because of the loosing of investment restrictions; at the same time, FDI will have important influence on the amount of trade and intra-industry trade among member countries. Finally, in order to guarantee the smooth operation of CJKFTA, member countries should come to an agreement through effective negotiation and engage themselves to the obligations concerning their benefit distribution and other economic actions.Chapter Six considered some extensions and compared 10+3 integration cooperation and NAFTA with CJKFTA respectively. We got some meaningful results and found that the setup of CJKFTA is a better choice for China.Chapter Seven discussed Chinese policy choice in the future FTA. We consider that it is important to expand Chinese intra-industry trade further in the future FTA, to change Chinese trade structure and give full play to the role of engine of the economic growth of our country's foreign trade. However, Chinese backward industrial structure,...