The Study Of China-ASEAN Free Trade Area Intra-industry Trade

In November of 2002, ASEAN(Association of South-east Asian Nations) signed"The agreement on comprehensive economic cooperation between China and ASEAN"with China, which marked that CAFTA(China and ASEAN Free Trade Area) has started formally.CAFTA has carried out"The trade agreement of the goods"in July of 2005, and took measures to reduce the taxes rate in an all-round way. Within several years, CATFA had already become the third largest free trade area of world after European Union and free trade area of Latin America. Meanwhile, the trade between our country and each ASEAN country developed rapidly, and the share of the bilateral IIT (Intra-industry trade) is increasing continually. According to the new foreign trade theory, the development of IIT can reduce both country's economic readjustment cost, expand foreign trade in an area and increase the welfare for each member in the area. Thus, the research of IIT between China and ASEAN is of great importance to promote industrial competence and optimize our export structure, also, it is meaningful to build CAFTA well in future.In order to research the devolpment of IIT between China and ASEAN, firstly, the article introduces the intra-industry trade theory and metering method briefly. Then, the author use IIT index and the G-H-M method after adjustment to analyze the horizontal and vertical IIT of the 15 kinds of main industries between China and five countries of ASEAN .We get the conclusion that the commodity of bilateral IIT mainly concentrate in the processing finished goods and the capital, technology-intensive products. And the low quality product market and the homogeneous product market take the main part, that is to say, the low quality vertical IIT and horizontal IIT trade stands as the core.In order to further explore what are factors that affect and restrict development of bilateral country in the IIT, this essay analyzes the main factors that influence development of IIT between China and the ASEAN systematically , it uses the Gravity model to examine several important factors among them. It obtains that the total national economic output and the market scale, as well as the per capita income level, are positive correlation factors for development of IIT between China and ASEAN, but the distance of bilateral countries and direct investment between China and the ASEAN countries are negative factors. Finally, according to some problems that exist in development of the CAFTA IIT, the author propose that bilateral countries need accelerate the construction of FTA in order to promote bilateral economy and trade development well. Implementing products differences strategy in order to promote the development of IIT in the bilateral countries is also need. Take actively measure to promote further development of foreign direct investment in the bilateral countries and to reduce the trade deficit of bilateral IIT.