Chinese-Japanese-Korean Intra-Industry Trade And Northeast Economic Community

Under the circumstances of non-government concerted mechanism, China, Japan and Korea have been keeping the relationship in accordance with the naturally formed market force. However, as to reply the combining trend of increasingly developing world economic areas, and as the three nations' economic dependence deepened, it is necessary to carry through the systematic economic cooperation. Therefore, Northeast countries began the discussing about building up Chinese-Japanese-Korean FTA after Asian financial crisis. From the analysis of the trade structure between China, Japan and Korea after the 1990's, we find that the inter-industry trade has already changed into the intra-industry trade and the trade between the finished products has changed into the trade between semi-manufactured products, which will lead to the possible result that the international competitiveness in the Northeast areas be controlled by the competitiveness of semi-manufactured products. However, Korea only has international competitiveness in a few parts industries such as the communication devices, electronic parts and electronic machines, in the other parts industries it has lower international competitiveness than Japan and Taiwan, and China is rapidly chasing up, as well as its gap is shortened gradually from the 1990's. If the regional free trade is carried through under this competitiveness structure, only the countries and areas, which have the relatively great advantages of semi-manufactured products, will get the trade profit. If Korea has no industry countermeasures in advance, it will take the risk of losing the big but getting the small. When carrying through Chinese-Japanese-Korean FTA, Korea needs a preparation phase to make the countermeasures in advance, which insures intra-industry competitiveness of the semi-manufactured products. According to the precedence of the policy, the economic community should be formed gradually. Korea has the export competitiveness only in the industries of the semi-manufactured products and parts, such as the textile, the shoes, the chemistry etc. Under this situation, Korea ought to restructure the industries decidedly, at the same time Korea should try to develop new industries of the semi-manufactured products which have quite a good demand foreground, and Korea should focus on the possibility of forming the economic community with China and Japan.