The Study On Relationship Between H&S Structure Of Overlapping Free Trade Area With Powerful Trading Country

With the rapid development of the economy,the economic communication between countries all over the world are increasing.Under the trend of globalization,a complex network of relations is formed..At present,the global multilateral trading system has been in a slow development stage.However,the political,economic and cultural communication needs are increasing.Under such circumstances,a new trading system is urgently needed to promote economic communication among countries.Therefore,bilateral trading system has been developing rapidly.With the rapid development of FTA,the FTA agreements between countries are intersecting,forming a overlapping FTA.In the overlapping free trade area,some countries signed bilateral FTA with two or more than two countries or regions,and the countries that signed FTA did not sign FTA.This phenomenon is called the hub and spoke structure(Hub-and-Spoke Structure,referred to as the H&S structure).Since 1990s,the importance of H&S structure has attracted more and more attention.Scholars at home and abroad have published a lot of research results.But these studies are not thorough enough and do not study the dynamic H&S structure in time.Therefore,the research space for this paper is left out.This paper will first study the status of FTA and overlapping free trade area and the status of powerful trading country,then study the development status and expansion of the overlapping free trade area and then we will analyze the impact mechanism of H&S structure on trade in the overlapping free trade area.Finally,the positive correlation relation between the hubs and the powerful trading country is obtained by empirical analysis.That is to say,the hubs of the overlapping trade area can get more benefits from the trade.Then,combined with theoretical and empirical research,the paper puts forward suggestions that can help China become an hub.The study summarize the research literature on FTA and overlapping trade area and trade powerful trading country at first,and then this paper further studies the development and expansion of the overlapping free trade area.In this paper,we found many features when studying the structure of H&S.The study found that H&S has a discriminatory and serious asymmetry,and the hubs can gain more benefits from bilateral trade,while the spokes are in a disadvantageous position,and the countries outside the region can't enjoy any benefit from the bilateral trade.In addition,the H&S structure has the characteristics of instability and dynamics.Through the study,it is found that the structure of H&S will be strengthened over time,and it has been developing dynamically.Some countries sign for FTA for some interests with far countries,which violates the prerequisites for the establishment of FTA,which will make the structure turbulent.The paper then analyze the impact mechanism of H&S structure on trade in the overlapping free trade area.In order to study this mechanism,we constructed the Cournot model.By constructing a model of four countries' participation,we find that hubs can get more benefits.Hubs are obviously in the dominant position in the competition between hubs and spokes.According to the study of the features of the H&S structure,the dynamics and instability show that the gap between the hubs and the spokes will become more and more large,and the unbalanced scale will be more biased towards the hubs.And in order to expand its own income as far as possible,the hubs will continue to push other countries to join their own FTA network,which will also damage the welfare of the former spokes.Then,The paper uses the point degree center degree of the average first 30 countries of total volume of foreign trade during 2005 to 2014 and four control variables as the explanatory variables.The factor of powerful trading country obtained by principal component analysis is regarded as the explained variable.Then,with the help of the empirical analysis of panel data,it is concluded that there is a positive correlation between the hubs and the powerful trading country,which,to a certain extent,shows that the hubs of the overlapping free trade area can get a lot of benefits in trade and have some advantages.Finally,as the hubs in the overlapping free trade area can gain more income in the international trade,it is easy to become a powerful trading country.This paper puts forward specific suggestions on the way China becomes hubs.