The Economic Effect Analysis Of China-gcc Free Trade Area

The Economical Globalization and Regional Economical Integration are two main tendency of the world economy since we entered into the 21st century. The current financial crisis leads to severe blow to every country's economy, further pushing the rise of trade protectionism. Under this background, many countries seek to participate in bilateral or multilateral economical cooperation for development. In the 17th Report of the Chinese Party "implementation of free trade area strategy" is formally put forward. And Two Sessions governmental work report also emphasized "speeding up the implementation of FTA strategy". There is distinct economic complementation between China and the GCC. The oil reserves of GCC are very rich, while China is the world's second-largest oil consuming country, which is highly dependent on foreign oil. The establishment of China-GCC FTA is of great significance to both sides. The China-GCC free trade area was officially launched in July 2004. So far four rounds of FTA negotiations have been held and a consensus is reached in most areas of goods trade, with the starting of negotiations on service trade. The ultimate completion of China-GCC FDA will enhance and consolidate our strategic position in the Middle East, leading us to obtain broader, more stable survival and development space. It will be a model of strengthening "South-South cooperation" and it has a good demonstration effect on other developing countries.In this paper, we will have an empirical study on economic effects of China-GCC free trade area, using qualitative analysis and quantitative analysis as a combination of research methods, with the theory of customs unions and free trade area theory as the theoretical basis. Combined with related knowledge of econometrics, the paper analyzes the practical foundation of China-GCC free trade area and systematically examines the economical effects on China due to construction of China-GCC FTA, putting forward the corresponding countermeasures and suggestions.This paper first briefly introduces the topic selection background of this paper, study status quo home and abroad, study contents and methods. Next is the theoretical foundation for this paper, which introduces customs union and FTA theory, to set a theoretical foundation for the research of this paper. On the above basis, it first introduces the basic situation of the GCC, followed by brief introduction to establishment background of bilateral FTA, and then by introduction to FTA negotiation process. Then comes to the studies of the practical foundation of establishing China-GCC FTA. From the angel of bilateral trade and investment, it analyzes bilateral economic and trade situation and analyzes the opening degree of bilateral economy and trade intensity, pointing out that there is a strong economic complementation between China and the GCC, and thus arriving at the conclusion that establishment of China-GCC free FTA has a solid practical basis.Then the study focuses on analysis of economic effects of China-GCC FTA. Firstly, it gives the empirical analysis of influence on Chinese bilateral trade by FTA through trade gravity model, and then analyzes the economical effects brought by construction of China-GCC FTA from the aspects of static effect and dynamic effects. The building-up of China-GCC FTA brings positive effects to both sides. The level of social welfare is improved. In conclusion, it mainly introduces obstacles and countermeasures faced with establishing China-GCC FTA. The obstacles include trade deficit and trade frictions between China and the GCC, the six GCC countries' economic development differences and similarities in economic structure, besides influence from great powers. The countermeasures and suggestions mainly include establishing a reasonable organization structure, dealing with difficult issues flexibly, forming effective energy cooperation mechanism, and strengthening communication with the great powers and so on.