An Analysis On Feasibility Of The Establishment Of A China-Korea Cross-border Logistics Free Economic Zone

China and South Korea established diplomatic relations in1992, political and economic cooperation has developed rapidly. Bilateral trade reached$210billions in2012, South Korea has become China’s sixth largest trading partner, the sixth largest export market, and the third largest source of imports, while China has become the largest trading partner of South korea. The two sides’trade volume increase fastly, especially affect the trade between Shandong Peninsula and Korea as they have the convenience of geography and economy, more than90%of Korean direct investment in China is in Shandong Province, China’s exports more than80%South Korean goods through the Shandong Peninsula port transportation.The Shandong peninsula is located in the east of China. Limited by Beijing,Shanghai, Guangzhou,Bohai Rim, the Yangtze River Delta city group and the Pearl River Delta city group,the possibility of being a metacity is minimal. At the same time, the development of korean economy, especially the consumption has entered a bottleneck period.Compared with Tokyo, Beijing, Hongkong and the other cities, the lack of hinterland and consumption groups restricted the development of Korea (mainly Seoul). So the the establishment of a china-korea metacity has a significant role on exerting the two countries’ economic potential.In this paper, based on the theory of international trade, logistics theory, econometrics, the use of comparative analysis method, statistical and measurement analysis, historical analysis, and other analytical tools and analysis methods to study feasibility of the establishment of a china-korea cross-border logistics free economic zone.The paper firstly reviews the theory of megacity, free economic zone, cross-border logistics free economic zone, On this basis, analyze the background, detailed plans, benefit and reasons of success or failure of Oresund metacity built between Danish and Swedish,the metacity between Britain and France, the Greater Pearl River Delta.Secondly, On this basis of the analysis of the actual economic and trade circulation, improve gravity model, propose a time measurement named " logistics barriers ", solve the problem that changes in traffic patterns and changes in political or diplomatic can’t measure together. And it confirms the improvement of this model was successful through the actual data.Thirdly,according to the condition of the improved gravity model, confirmed the feasibility of the establishment of a china-korea cross-border logistics free economic zone.The paper compares advantages and disadvantages of two ways that improve the traffic pattern and diplomatic, political relations by using the improved gravity model and predicting the scale of development.Finally, we get the conclusion:China and Korea should enhance the soft power of the megacity between Shandong Peninsula and South Korea by enhancing political mutual trust, opening private investment, simplifying customs clearance procedures, speeding up the visa clearance, simplifying the currency exchange model and a series of political, diplomatic and economic work.At the same time, China and Korea should enhance the hard power of the metacity between Shandong Peninsula and South Korea by the project of the undersea tunnel between the two countries.So that it can achieve the purpose of establishing a china-korea cross-border logistics free economic zone.