A Study On The Economic Influences To China’s Development Of Strategic Partnership With ASEAN Countries By The Construction Of CAFTA

ASEAN is China’s important neighbors. It occupies a decisive position in the surrounding stability, economic development and all-round diplomacy due to ASEAN’s special geographical location and rich resources. The Frame Work Agreement of China-ASEAN Overall Economic Cooperation signed by China and ASEAN in November2002signifies the beginning of China-ASEAN Free Trade Area (hereafter called CAFTA).CAFTA has established on January1st,2010, which will help China and ASEAN develop strategic partnership more comprehensively, deeply and rapidly, and enhance the status of the two sides in international trade. It can ensure China and ASEAN achieve a win-win relationship and bring both sides many economic benefits. The construction of CAFTA is not only an inevitable result of deepening bilateral economic and trade cooperation, but also an inevitable choice in the background of economic globalization and regional economic integration. However, as a hot topic in recent years, strategic partnership has gradually become an important way in regional cooperation between countries, and also a key channel for China’s future participation in globalization. The construction of CAFTA affects the development of strategic partnership between China and ASEAN through the influence of national interests, such as political interests, economic interests, educational and cultural interests, security interests, in which economic interests are particularly important. Therefore, a careful analysis and a correct understanding of the economic effects created by CAFTA have important theoretical and practical significance to promote China-ASEAN strategic partnership and deepen bilateral cooperation.Combined with the establishment and development processes of CAFTA, the thesis does comprehensive research on the economic effects of CAFTA for China and ASEAN, and analyzes its impacts on the promotion of strategic partnership between China and ASEAN. In the theoretical part, this thesis adopts the International Division of Labor Theory, the Interdependence Theory, the Customs Union Theory and the Free Trade Area Theory. In order to investigate the economic effect of CAFTA, it mainly applies the Customs Union Theory to the Free Trade Area. It analyzes the trade and investment effects before and after the establishment of CAFTA by diagram. In the empirical part, the thesis demonstrates the trade effects of CAFTA by computing the Revealed Competitive Advantage (RCA), Trade Combination Degree (TCD) and Intra Industry Trade Index (GL). In addition, the author examines the trade effects of CAFTA by the Balassa Model.This paper is divided into seven chapters, each chapter is as follows:Chaper one is introduction. It mainly illustrates the background and the significance of the research, summarizes the relevant literatures, and introduces the research ideas and the research methods.Chapter two is the theoretical basis. It summarizes the regional economic integration theory from the perspective of international economics and international political economics. It analyzes the International Division of Labor Theory, the Interdependence Theory, the Customs Union Theory and the Free Trade Area Theory, the theory of customs union is the basis of analyzing the economic effects of CAFTA. This chapter provides a clear theoretical background and a solid theoretical foundation for the following empirical analysis by the relevant theories.Chapter three reviews and summarizes the formation and development of CAFTA, paving the way for the development of the strategic partnership between China and ASEAN and providing background information. The relations between China and ASEAN have gone through four stages:the initial mutual Cold War, comprehensive dialogue, the mutual trust and finally the strategic partnership. With the mitigation of bilateral relations between China and ASEAN, CAFTA gradually develops and sets up.Chapter four is the core part of the article. In this chapter the author researches the comprehensive economic effects of CAFTA:trade effects, investment effects and so on. In the analysis of the trade effects, it found that China and ASEAN countries have inter-industry trade in complementary industries, intra-industry trade in competitive industry. In the investment effects, it analyzes the investment creation effect and diversion effect through the chart data. In addition, the construction of CAFTA will also create social welfare effects, economy of scale effects and competition effects, and improve the political and economic status of the members and promote the development of service trade and monetary cooperation.Chapter five is also the main part of the article. It analyzes the economic effects of CAFTA on the economic impacts of China’s development of strategic partnership with ASEAN countries, including the promotion of bilateral trade, investment, finance, e-commerce, energy, sub-regional and other aspects of cooperation. It can be seen from the preceding analysis, bilateral trade cooperation will develop from inter-industry trade to intra-industry trade, the field of which will be involved in services, agriculture. The construction of CAFTA will expand the area of bilateral cooperation, make the policy relevance of both sides be consistent, and promote the further development of strategic partnership between China and ASEAN countries.Chapter six is the conclusion and policy recommendations. It mainly puts forward some measures and advices about promoting China’s development of strategic partnership with ASEAN countries, which based on the results of the preceding analysis. It includes six aspects:strengthen the political and cultural cooperation between China and ASEAN countries; promote bilateral cooperation in various fields; carry out different levels of trade cooperation; expand the trade volume; increase mutual investment.Chapter seven is the summary and outlook. It describes and summaries the whole content, and points out the direction that the topic should further research, finally, summarizes the experiences and lessons from the influences on the strategic partnership between China and ASEAN by the constrction of CAFTA in order to put forward some advantages that can learne from our strategy in the development of free trade zone and strategic partnership with other countries.The innovations of this paper are the following four aspects:1. Many scholars studies the construction of CAFTA and strategic partnerships separately, there are still relatively few studies about the economic influences on China’s development of strategic partnership with ASEAN countries by the construction of CAFTA;2. This paper uses the method of theoretical and empirical analysis. From the theoretical perspective, it has a qualitative ananlysis by using the theory of international economics and international political economics, and it analyzes the construction of CAFTA by empirical analysis of data and models;3. This paper analyzes trade effects between China and ASEAN countries through trade indicators, and makes comparison to illustrate the differences of trade effects on China and ASEAN, and different types of commodities by the construction of CAFTA;4. This paper establishes amended Balassa model and the error correction model to test China’s trade creation and diversion effect since the implementation of CAFTA’s trade liberalization.