The Development Of CAFTA’s Economic And Trade Pattern And The Strategy Of South China Sea

South China Sea is rich in petroleum resources, natural gas resources and fishing resources. Because of ASEAN’s economy developing rapidly, there are covetous of the valuable resources of South China Sea. Encroachments on China’s sovereignty and interests in the South China Sea are not infrequent, and some extra-regional countries are attempting to interfere in this issue since the outbreak of the South China Sea issue in2009. They encroach Chinese islands in the South China Sea, which will do great harm to China’s sovereignty and interests.Meanwhile, conflicts of territorial contention exist, but there is great common interest between China and ASEAN. The construction of CAFTA will have a positive effect on the development in both China’s and AEAN’s economy, and creates huge trade and investment creation effect and transfer effect which enhance the common interest between China and ASEAN.The Territorial conflicts of South China involve multiple factors, including International economy, International politics, military and culture, so it is a comprehensive problem. However economy cooperation is the most important connection between China and ASEAN pushes the development of bilateral economy and creates huge common interest. Thus they solve the territorial conflicts by cooperation is possible, and we should use the non-zero-sum game model to analyze the territorial conflicts between China and ASEAN rather than using the zero-sum game model. China should seize the economic globalization and regional economic integration opportunities and should participate the cooperation and competition of International economy, especially in the regional economy, to promote economic development and regional stability and to weaken the the Territorial conflicts of South China. Thereof, this article intends to use non-zero-sum game theory proposed by Thomas C. Schelling to analyze what economic strategies China uses to balance and solve the territorial contention, and this article will come up with Chinese economic South China Sea security strategies and suggestions to keep normal development in relationship between China and ASEAN. First of all, this article will describe the situation of South China Sea territorial contention. Secondly, because trade and investment are the most important connection between China and ASEAN, the induction of CAFTA trade and investment’s situation and feature will be needed, and according to the induction this article will forecast the evolution trend of CAFTA’s trade and investment. Thirdly this article will make a step further look into the trade and investment between China and The Philippines, China and Vietnam and forecast its evolution trend. Fifthly, according to the analysis of the bilateral economic and bilateral territorial conflicts’cost and benefit, this article will construct a non-zero-sum model to analyze China-The Philippines and China-Vietnam territorial conflicts. Finally, according to the non-zero-sum game model analysis, the article try to come up with some strategies to balance and solve the territorial contention problem.