The Analysis On The Development Of Trade And Promoting Factors Between China And Singapore

Since the21st century, with the world’s accelerating the process of the globalization of economy and the regional economic integration, countries are tending to improve their pace of international trade and actively seize the favorable world market. As one of the largest developing countries in the world, with huge market resources and rapid economic growth, China has been regarded as the most potential developing country. As an emerging industrial country, with its important trade routes in Southeast Asia and unique geographical advantages, Singapore plays an important role in the economic development of the Asia-Pacific region. New friendly relations between China and Singapore began in the early1990s, and in October1990the two countries formally established diplomatic relations. Since the establishment of diplomatic relations between the two countries, China and Singapore’s bilateral economic and trade cooperation has deepened and maintained a steady and rapid rise. On October23,2008, China and Singapore signed a bilateral free trade agreement on the basis of the China-ASEAN Free Trade Area,, which is the first free trade agreement between China and individual ASEAN country. It indicates that the economic and trade cooperation between the two countries entered a new stage. China has gradually become Singapore’s second largest trading partner while Singapore is China’s largest trading partner and the only developed country in the ASEAN. China-Singapore’s bilateral trade has become an important part of the two countries’relationship. Through the analysis of the trade development of China and Singapore and promoting factors, on one hand, it provides a reality and theoretical basis for promoting the further development of bilateral trade, on the other hand it contributes valuable experience and advice to regional trade development strategy in China.With a combination of theoretical and empirical methods, this paper explores the development of China and Singapore bilateral trade and promoting factors, which is beneficial to promote further trade between two countries and make recommendations for China’s FTA strategy. This paper is divided into five chapters, its specific research ideas and reads can be described as follow:The first chapter is an introduction, which mainly introduce the background of this study, the research significance, literature review, the innovation, research and methods. The second chapter analyzes the trade situation based on the new trade volume and trade with the index between the two countries. Chapter3makes a theoretical analysis for China and Singapore trade with comparative advantage theory, the theory of intra-industry trade and free trade area theory. Chapter4is an empirical analysis on propulsion factors of bilateral trade development. This chapter first analyzed comparative advantage of two countries by using of Revealed Comparative Advantage, then it is empirical analysis of intra-industry trade that used trade-specific coefficients and intra-industry trade index between the two countries, and finally it is the empirical analysis of trade effects of free trade areas by trade gravity model. The fifth chapter elaborates the conclusion and policy recomm endations.Through the analysis of the bilateral trade between China and Singapore, it can be concluded that the trade volume has grew increasingly after1995and the bilateral trade has tied closer.especially since2001, trade between the two countries rises rapidly and the growth rate of bilateral trade and the degree of integration have got a substantial raise. In this paper, with the combination of theoretical and empirical analysis methods, by studying the simulative factors of the development of trade between the two countries, we can get the following conclusions:China and Singapore have comparative advantage differences in resource-intensive, capital-intensive, labor-intensive products, and complementary differences in comparative advantage which is the basis of the conduct trade. There is significant complementary trade industry within intra-industry trade between China and Singapore, which is mainly concentrated in the industrial finished products. Intra-industry became the major trading characteristics of two countries trade, and become an important way to expand bilateral trade, and also a new growth point. Both China-ASEAN Free Trade Area and the new establishment of free trade area between China and Singapore have a positive role in promoting trade between the two countries.Compared with the previous literature, this paper uses the latest data. Furthermore, in the aspect of the theoretical and empirical points, this paper analyzes the trade development between China and Singapore as well as the promoting factors systematically. In addition, in the Empirical Analysis of the Free Trade Area effect, the China-ASEAN CAFTA, China-Singapore FTA and financial crisis dummy variable were introduced innovatively to the traditional gravity model. By using VAR model and getting equation with Johansen cointegration test, the paper further analyze the impact of dual system factors to the trade between China and Singapore.