The Research Of Trade Structure Changes And Economic Effects In China During East Asian Regional Economic Integration

Since the middle of last century, East Asian economy has been in the world stage with its unique dynamism. Japan, the East Asian Dragons, the ASEAN Tigers, China and other countries have successively implemented "export-oriented" strategy, jointly creating an East Asian economic miracle. The Asian financial crisis in1997and China’s entry into WTO in2002have made Chinese manufacture an important force in the world economy and the pioneer of China’s trade and economic prosperity that exposed a profound impact on division of the network in East Asia. Especially with the China-ASEAN Free Trade Agreement signed, the cooperation between China and ASEAN economies is constantly deepening. In2006, the Ministry of Commerce put forward the policy of "accelerating the establishment of peripheral free trade zones on the basis of China-ASEAN FTA". Then it was advocated in the report of the Seventeenth Party Congress in2007that "we should implement the Free Trade Area strategy and strengthen bilateral and multilateral economic and trade cooperation". All of these indicate the idea of promoting economic integration in East Asia through free trade zones. The world financial crisis in2008provides a stage further for the deepening of the East Asian regional economic integration. In the future, what course to follow for China and East Asian economy? Will regional economic integration bring about win-win situation and become a new engine of economic development in East Asia? To answer these questions, we must first deeply understand how the trade structure of China and the rest of East Asian economies changes and then analyze the influence of different proposals about Regional Economic Integration in East Asia on the impact of trade structure and national welfare, especially the changes of welfare effect in China in a dynamic perspective.Based on the background mentioned above considering Division of Network of East Asia which deepens constantly, the change of trade structure between China and the rest of East Asia economies since the mid1990’s has been investigated systematically, in this thesis, adopting a series of index such as TSC(Trade Specializing Coefficient), RCA(Revealed Comparative Advantage Index), TCI(Trade Complementarity Index), Ⅲ(Intra-Industry Trade Index), Ⅷ(Vertical Intra-industry Index) and revised method calculating technology content of exports from multi-levels of inter-industry, intra-industry, intra-product and technology content of products. Choosing multi-country CGE model (GTAP) and single-country dynamic CGE model (MCHUGE) which considers new trade theory, the effect of China’s participation in East Asia Regional Economic Integration through ECFA (Economic Cooperation Framework Agreement), Sino-Korean Free Trade, NEAFTA (North East-Asia Free Trade Agreement) on trade structure and economy as a whole of China and the rest of East Asia economies are examined in statistic and dynamic fashion respectively.In terms of theoretical perspective, this thesis builds a set of methods calculating the technology content of exports at first with aims to determining more accurately whether china’s participation in globalization and regional economic integration will promote Chinese industrial upgrade. Secondly, in order to make the evaluating results close to economic real life, this thesis introduces New Trade Theories like Scale Economy, Monopolization and Product Diversification and so on into stylized model (MCHUGE). Regarding the empirical study, this thesis estimates the change of trade structure between China and the rest of East Asia economies applying TSI, RCA, TC and III with the detailed data from UNCOMTRAD. Secondly, the change of intra-product trade is analyzed by adopting BEC (Broad Economic Categories, a three-digit classification) data and calculating VIII of Chinese exports. Thirdly, the technology content of exports from Japan, Korea, Indonesia and China is compared. Finally, the economic effect of various proposals for china’s participation in East Asia Regional Integration is evaluated in static and dynamic fashion respectively, using GTAP and MCHUGE. In addition, the dynamic economic effect of various proposals is further estimated on the basis of transformed market structure. Key findings are showed as follows,(I) There is trend that the competitive advantage and comparative advantage of products in East Asian economies are gradually more concentrated on capital-intensive and technology-intensive products. The inter-industry trade complementarities between China and the rest of East Asian economies are weak and decreasing while those of the intra-industry are gradually strengthening. In the labor-intensive products such as textile and clothing, China primarily keeps inter-industry trade with developed entities such as Japan, South Korea and Singapore whereas mainly remain intra-industry trade with five countries in ASEAN. On the other hand, for electronic and electrical products, there is mainly the intra-industry trade between China and the rest of East Asian economies, thereby forming a common competitive and comparative advantage in East Asia. (Ⅱ) Since the mid-1990s, the intra-product trade between China and the rest of East Asian economics has developed rapidly. Specifically, the proportion of intermediate goods imported from East Asian economies of China is more than60%, while the major exports from China to the rest of East Asian economies are final products, thus forming a "New Trade Triangle" between "the other East Asian economies-China-European and American economies". The rate of Chinese exports’ vertical specialization keeps rising. The intermediate products from the five countries of ASEAN make more significant contribution in contrast of the decreased of that in Japan and Taiwan. In respect of Industries, there is the highest rate of vertical specialization in communications equipment, computers and other electronic equipment manufacturing, which further indicates that China has formed a deep division network with other East Asian economies in electronic productsThe calculation results of technology content of domestic exports show that China’s entry into WTO has a negative impact on the technical content of domestic exports in China, but in the long run, it will recover with the enhancement of supporting capacity of domestic enterprises, and promote the exports upgrading. China’s participation in globalization and regional economic integration does not make the added value in Chinese exports locked in low-end.(Ⅲ) With respects of general equilibrium, the growth rate of investment, export, consumption, which is known as the troika for economic growth, is all on the rise in the process of East Asia Regional Integration and the investment contributes mostly. In terms of industrial level, the output of Apparel, Leather, Down&Products and Textile, which is Labor-intensive Industry in China with the traditional comparative advantage, will rise steeply. To be more specific, there is relatively greater negative effect of NEAFTA on Chinese Transportation Equipment Industry and then the output of Smelting&Pressing of Metals Industry will decrease through the close industrial linkage, for Japan and Korea has a stronger comparative advantage in Transportation Equipment Industry. All in all, the participating of China in East Asia Regional Integration will promote the substantial increase of output in Labor-intensive industry like Apparel, Leather, Down&Products and Textile. In addition, the export of Agriculture&Foods Products industry in China grows fairly rapidly, which Chinese mainland has more comparative advantage than Japan, South Korea and Taiwan does.If the Incomplete Competition factors such as Increasing Return of Scales, Monopolization and Products Diversification are considered, the actual promoting effect of East Asia Regional Trade Liberalization on Chinese economic growth is more remarkable. More specifically, the output of Transportation Equipment, Petroleum Processing and Coking and Smelting&Pressing of Metals Industry increases dramatically which benefits the industries with close linkage to them at the same time and then the simulation result regarding the actual output is bigger than that in complete competition setting.In the end, the policy suggestions in terms of Chinese FTA strategy are put forward on the basis of research conclusion.