Research On The Economic Effects Of The China-Japan-Korea Fta And Its Impacts On Zhejiang Province

Economic globalization and regional economic integration have become the most significant economic trends nowadays. Regional economic integration has played a vital role in the cross-border flow of production factors such as trade, investment, and others. Lots of countries have signed FTAs to obtain trade and economic growth. At the same time, however, the regional economic integration in Northeast Asia is relatively backward. As the three major economies of Northeast Asia, China, Japan, South Korea have not established regional economic cooperation yet. Along with the deepening economic relationship among the three countries, the establishment of CJKFTA (China-Japan-Korea FTA) has become a great issue among the three parties. The very first negotiation on the establishment of CJKFTA began in this March; it’s a milestone of in the process. The establishment of CJKFTA will have a huge positive impact on foreign trade and investment of China and its districts.Based on the theory of the FTA, this paper learn from related research on CJKFTA, by analyzing trade status and industrial complementary of the three countries, this paper proceeds to analyze the economic effects of the CJKFTA. Then take the angle of Zhejiang Province, from three perspectives-trade volume, trade structure, investment to study the impacts of CJKFTA to Zhejiang Province. To analyze CJKFTA’s impact on Zhejiang Province’s trade volume, this paper use the export panel data of Zhejiang Province to its trading partners (region) to build a trade gravity model. By introducing a dummy variable FTA to gravity model, then use the model to testify that the CJKFTA can also have export promotion effect. Then use the trade gravity model to analyze the trade potentialities among the three countries. The results show that there are huge trade potentialities among Zhejiang Province, Japan and Korea. The establishment of CJKFTA will further deepen trade between Zhejiang Province, Japan and South Korea. As to trade structure and investment, this paper mainly by describing the current status of the three countries and problem in it or by comparing Zhejiang Provinces to Japan and Korea to analyze the possible impact of CJKFTA. Finally, several suggestions and countermeasures are considered for Zhejiang Province to deal with the new challenges, seize new opportunities, deepen foreign trade with Japan and Korea, update its trade structure and increase investment with Japan, Korea.