The Research On The Trade Effect Of China-Asean Free Trade Area

In the era of rapid development in globalization and regional cooperation, all countries, especially the developing countries, are facing the common issue of how to integrate with the world economy. The Chinese-Asean Free Trade Area, which is to be formed by the largest two developing countries in the world, whose success or failure has great bearing on the above issue.Based on the theories of International Economics, by means of qualitative and quantitative studying method, this paper mainly focuses on the trade effect of Chinese-Asean Free Trade Area (CAFTA), which includes the trade creation effect, trade diversion effect, and intra-FTA trade effect.Firstly, this paper applies the theory of customs union into the free trade area, and then makes an analysis on the tariff status in quo of China and Asean to educe the trade effect caused by the tariff reduction between China and Asean.Secondly, this paper studies the trade effect from the angle of comparative advantage to draw conclusions to ariswer such question: in which industries will the trade creation and trade diversion happen?Thirdly, to know the industries' adjustment cost in building CAFTA, this paper expounds the intra-industry trade between China and Asean.Fourthly, the author uses a simplified trade model of CAFTA to make a regression on the recent yearly data of China and Asean, based on this model, the author forecast the future trade effect of CAFTA.At last, the author brings forward some advice on trade cooperation strategies for China and Asean.