Analysis Of The Impact Of Sino-Korea FTA On China Automobile Industry

Since Sino-Korea FTA was proposed in2002, it has been the hot topics in theeconomic field of two countries. FTA means two or more States negotiation inbilateral or multilateral ways, aims to realize trade liberalization through eliminatingtrade and non-tariff trade barriers, reducing tariff, to achieve free movement of goodsbetween member states. There has obvious unbalance development of automobileindustry between China and South Korea: China’s automobile industry displays poortechnology and international competitiveness, lack of economies of scale. WhileSouth Korea has high technical level，international competitiveness and prominentscale economy.This paper uses the methods of literature analysis, quantitative analysis andthe qualitative analysis and comparative analysis, analysis of China and SouthKorea’s automobile industry competitive power and the impact of Sino-Korea FTA onChina automobile industry, put forward some targeted policy recommendations. Thefirst chapter discusses the research background, research purpose, significance as wellas Sino-Korea FTA and the automobile industry related literature review. The secondchapter introduces the theory of free trade, including comparative advantagetheory, H-O theory, scale economic theory and regional economic integrationtheory. The third chapter studies the process of negotiations of Sino-Korea FTA,negotiation, the negotiation focus and the sensitive attribute of China’s automobileindustry. The fourth chapter makes a quantitative analysis on China’s automobileindustry status quo and competitiveness, compares industrial concentration, revealedcomparative advantage index, trade competition index and the quality competitivenessindex of automobile industry between the two countries. The fifth chapter analysesthe influence of Sino-Korea FTA on China automobile industry from the two aspectsof trade routes and investment path. The sixth chapter studies the influence of signing Sino-Korea FTA will bring to China automobile industry from the two sides ofpositive and negative effects.The seventh chapter puts forward relevant policysuggestions for the further development of China’s automobile industry.This paper gets the following conclusion after the above study: China and SouthKorea’s automobile product structure are complementary to each other; Chineseautomobile industry hierarchical level and technical level are lower than South Korea.As a result, Chinese automobile enterprises cannot compete with South Korea in highprofessional skills temporarily. Sino-Korea FTA will have some positive effect onChina’s automobile industry, for example, promotes Chinese automobile industryscale, improves the structure of automobile product of our country, and improves thetechnical level of China’s automobile industry, increases consumer welfare. However,it may bring some negative impacts: brings fierce competition in automobile,threatens the independent brand, small and medium-sized enterprises may beconfronted with the danger of surviving. Therefore, Sino-Korea FTA is both anopportunity and a challenge to Chinese automobile industry. At the same time, inorder to improve the international competitiveness of China automobile enterprises,our government should strengthen the automobile industry support and formulatescientific and reasonable industrial policies.