Investment Effects Of Economic Integration In East Asia Region And China Countermeasures

Over the past few decades, the signing of worldwide regional integration agreement has been expanded in both quantity and scope. With the rapid development of regional economic integration in the world, the development in foreign direct investment has grown rapidly. Foreign direct investment has become a major route for foreign companies to enter into the host market. Thus, investment and regional integration are two notable phenomena in the world economy and their integration is called direct investment effect of integration. According to economic theory, regional trade agreements can not only generate such static effects as trade creation, trade diversion and etc. by reducing the tariff level and non-tariff barriers, but also stimulate the growth of investment and the expansion of market and generate other dynamic effects. Therefore, the regional economic organizations emphasize not only the development of regional trade liberalization, but also the investment facilitation and liberalization. The development of regional economic integration will undoubtedly have a major impact on transnational corporations' international production and global pattern of foreign direct investment.To East Asia, although the regional cooperation in East Asia is in terms of late compared to other areas, it has gradually become a flourishing trend after Asian financial crisis. East Asian economics has begun to integrate into the whole world, which is bound to have an important impact on attracting foreign investment and investing abroad for the entire scope of East Asia. In such background, this paper analyses the investment effects of economic integration in East Asian region in theory and evidence. On the basis of a comprehensive review and in-depth theoretical study of predecessors, the article analyses the investment effect of East Asian regional economic integration, which is based on the analysis of two cases of ASEAN Free Trade Area and China ASEAN free trade area. The article then makes a number of recommendations on strengthening investment cooperation between China and other East Asian countries and actively participating into East Asia's integration process.Traditional integration theory includes not only static analysis, but also dynamic analysis, both of which can be found in this article. Both the static and dynamic effects of regional economic integration are important factors affecting investment. The static effect makes the entire region become more attractive to external investors, while making the investment within the region increased. The dynamic effect of regional economic integration has a more long-term appeal to FDI. In this article, how the establishment of regional organizations affects the regional capital inflows and capital flows within the region is studied separately. The article also focuses on the analysis of the effect of China's foreign capital inflows after establishing regional organizations ma(?)ly the ASEAN Free Trade Area and China-ASEAN Free Trade Area) and the...