A Study On Economic Effects Of China-ASEAN FTA

China and ASEAN agreed to build China-ASEAN free-trade area (CAFTA) by 2010, in 2001. Most CAFTA members are developing country, and all countries of ASEAN are small. It can't forecast whether this kind of FTA that constructed by developing or small countries can bring well economic effects based on other examples. Therefore, many investigators are trying to analyze CAFTA's effects. Most of their studies are qualitative, however, little are quantitative. In this background, this paper attempt to analyses the economic effects of CAFTA by a computable general equilibrium (CGE) model. This paper, first, introduces the theories and demonstration models that are used to analyses free-trade area, and summarizes the researches on economic effects of China-ASEAN Free Trade Area. Then, this paper introduce CGE model, includes its theoretic structure, closure and the methods to calculate CGE model. CGE model turns general equilibrium theory into a mathematics model that can be computed. It bewrites main body of economic system, the equilibrium between supply and demand is achieved via adjusting the price and quantity of commodity and factor. At last, this paper selectes the Global Trade Analysis Project (GTAP) model to simulate the CAFTA's effects. The data to be used in simulation comes from GTAP Database 6.0. This paper divides the word into eight areas, and aggregated the industry into three kinds. These areas and industrys's data is aggregated by GTAPAgg software. By RunGTAP software, which is designed to calculate GTAP model, the results are educed. The conclusions which based on the results, show that CAFTA will bring great effects to the members in many fields, such as GDP, welfare level, and the scale of import & export and etc., will be improved. This paper also analyzes the effects that CAFTA brings to China briefly, and puts forward counter-measures and advices.