The Research On The Realization Of Trade Potential Of CAFTA

China-ASEAN free trade area (CAFTA)has officially completed in2010, which means China and ASEAN countries having to reduce global tariffs on7000kinds of goods from current levels to zero under China-ASEAN Free Trade Agreement. In other words,90%of trade products will be imported with zero tariff treatment and achieve trade liberalization in goods. So it will have more significant economic sense for china about how to develop economic relations and strengthen economic cooperation with Malaysia, Thailand under the background of Free Trade Area.Both China and ASEAN members Malaysia, Thailand are developing countries, whose trade relationship may focus on competition. But the paper comprehensively analyzes the complementary trade between China and Malaysia, Thailand with the instruments of RCA index and complementary index which is the realistic foundation for economic cooperation between China and the ASEAN countries. Based on the complementary trade relations, the manufactured goods and industrial products should reach their full potential easily. The paper uses the gravity model to examine the potential of the manufactured goods and industrial products between China and Malaysia, Thailand. The results indicate that the manufactured goods export has shown deficient. But industrial products trade performance is different to the same country. The paper estimates the trade potential basing on the ratio of theoretical value to actual value. The factors influencing actual value will also affect trade potential.Associating with export growth of conduction mechanism; the paper applies with constant market share analysis to deal with factors which influence tapping into the potential of trade. According to analyze the result of influencing factors, the paper shows that shortage of demand and weak competitiveness is the main reason which produces an effect on working to full potential between China and Thailand,Malysia respectively. For different industries the reason why the trade potential does not fully explore has distinction to different industrial products. The paper finally concludes that strengthening the cooperation in the manufactured goods fields is the basic and important way which will promote realizing trade potential of the manufactured goods from China and ASEAN countries. For cooperation of the manufactured goods we can undertake in three ways including improving import demand, adjusting trade commodity structure and enhancing the products'competition which will accelerate realizing the trade potential between China and ASEAN countries.