Research On The Economic Effects Of China-singapore Free Trade Area

As the first Free Trade Area established between China and single ASEAN country, China-Singapore FTA exhibits prominent demonstration effect and bears reference significance for China in building step by step free trade area networks that obtain foothold in the neighborhood, radiate “One Belt and One Road” and face the global community. Through studying the economic effect brought by the establishment of China-Singapore FTA, the pace of the China-Singapore bilateral economic and trade cooperation can be sped up, the depth and breadth of free trade relations between the two countries can be expanded and the level of opening up of China’s economy can be further improved.Based on the import and export volume between the two countries from2004 to 2013 as sample data and referring to four indexes, Trade Combine Degree Index(TCD), Competitive Advantage Index(CA), Comprehensive Trade Complementarity Index(TCI) and G-L Index, an empirical research is carried out in the thesis on four aspects of bilateral trade, including the closeness of trade ties, export comparative advantage, the degree of complementarity and intra-industry trade form. The results of the research show that the trade ties between the two countries are close, each country enjoys export industries with comparative advantage, the bilateral trade is strongly complementary and the trade form is mainly intra-industry trade.After analyzing the status quo of China-Singapore bilateral trade, the thesis,via adopting the Balassa model, analyzes and studies the trade creation and trade diversion effect brought by the establishment of China-Singapore FTA. Analysis results show that the signing of China-Singapore Free Trade Agreement, due to the influence of various factors, does not produce significant trade creation and trade diversion effect. Then, the thesis discusses the dynamic economic effect after the establishment of China-Singapore FTA, namely the study of the dynamic effect of economical growth effect, investment effect, competition effect and scale economic effect brought by the signing of free trade agreements between the two countries. Through the above analysis, it can be known that the establishment of China-Singapore FTA is conducive to the rapid and smooth development of China’s economy; Singapore’s direct investment in China is much higher than China’s direct investment in Singapore, the choices of the two countries in the field of investment are quite different and a huge potential for growth and development is contained in China’s investment in Singapore; the establishment of China-Singapore FTA significantly improves the competitioneffect, and compared with China, Singapore’s overall competitiveness is at a disadvantage; due to the establishment and development of the FTA, market size and demand for commodities is expanded and increased respectively and the manufacturers of industrial goods with comparative advantages can expand the production scale, leading to a growth in production, which, at this time, reduce the average cost in the long-run, so that scale economic effect can be achieved ultimately.Finally, the thesis proposes countermeasures and suggestions to further deepen the development of China-Singapore FTA, in order to promote bilateral economic and trade cooperation between China and Singapore to a new leap and new level. The countermeasures and suggestions include deepening intergovernmental cooperation project and intensifying cooperation to achieve mutual benefit and win-win situation; optimizing export structure of Singapore’s business and expanding the percentage of service trade to enhance the influence and competitiveness Chinese service trade exerts in the Singapore market; and encouraging Chinese enterprises to “Go Global” and perfect the investment service system to protect, safeguard and develop the legitimate rights and interests of Chinese enterprises in Singapore.