A Study On The Determinants Of Dual Margins Of Chinese Export Growth To ASEAN

The establishment of Chinese ASEAN Free Trade Area (CAFTA)’s main purpose is to improve aspects of trade relationship between the Chinese and ASEAN countries and promote the development of regional trade liberalization. The idea to construct China-ASEAN Free Trade Area had been started since 1990’s. The sixth China-ASEAN Summit in November 2002 was held in the Cambodian capital of Phnom Penh, the leaders of China and ASEAN Member signed the Framework Agreement on China-ASEAN Comprehensive Economic Cooperation, which means the process of establishing Free Trade Area officially started. Combined China and ASEAN nations became the world’s largest free trade area in term of population and became the third largest by trade volume. Since signing of the agreement, bilateral trade between China and ASEAN nations increased rapidly. The total trade of two parties has jumped over seven-fold, from US$54.7 billion in 2002 to over US(?) 4,000 billion in 2012. This fact shows that the establishment of China-ASEAN Free Trade Area support bilateral economic growth in long term.In recent years, China- ASEAN two parties enhance the close economic and trade relations. The data cover exports from China to South East Asia countries in product categories to access the importance of the intensive and extensive margin in China’s export. From the beginning of signing the agreement until now, we find that China’s export growth relies mainly on intensive margin. Moreover, while the influence of extensive margin does not appear obvious, this influence is slowly increasing. In addition, this research also gives empirical analysis into the determinants of the margin of trade by using the gravity model. The results show that the larger size of the market at destination nation increase the volume of exports growth and longer distance between two countries affects the increasing of variable cost. Likewise, language and geographical borders would reduce trade cost. The analysis results in this paper are consistent with the basic theory of the gravity model of trade.The main content of this paper is divided into four chapters. The first chapter is the introduction, briefly describes the research background and implication, literature review, research methods and innovation. The second chapter will evaluate from China exports to ASEAN nations of trade growth on patterns of export diversification. This chapter studies the effect of export growth from China to ASEAN countries in three levels; export products, export value and bilateral trade of export products. The Third chapter, we present our empirical analysis by using gravity model to discuss some determinants of dual margin of export growth, which are GDP, geographical distance, language and border. The fourth chapter is the conclusion and policy suggestion by summarizing the main findings of the paper and discussing some policy recommendations.