The Feasibility Study On The Establishment Of Free Trade Area Between China And Bangladesh

Due to the “One Belt and One Road” initiative,China has actively established good relations with countries along it.Bangladesh is not only a country along the "One Belt And One Road",but also an important member of the "China-Bangladesh-India-Burma economic corridor",so the establishment of Free Trade Area between China and Bangladesh is expected.After a meeting between Chinese foreign minister Wang Yi and Bangladesh's Ali in June last year,the two sides reached consensus on the establishment of Free Trade Area between the two countries and put forward a feasibility study on it.Therefore,this paper will conduct a feasibility study on China-Bangladesh Free Trade Area based on trade in goods.The author has read and sorted out the relevant literature of Free Trade Area theories and designed a normative research framework.When analyzing the current situation of China-Bangladesh trade in goods,the author calculated the world trade status,degree of trade dependence,trade potential and Balassa's index of the two countries.The results show that the two countries are in a stage of cooperation needed to be upgraded.Then,based on the perspective of trade in goods,this paper analyzes the feasibility of establishing Free Trade Area between China and Bangladesh.Using the revealed comparative advantage index to measure the complementarity of trade between the two countries,then using the gravity model theory to analyze the relative trade efficiency of the two countries and using the partial equilibrium model to predict the welfare changes after the establishment of Free Trade Area between the two countries.The conclusions show that: first,the trade structure of the two countries is complementary so the two countries have a good trade foundation.Second,the relatively low transaction efficiency of Bangladesh makes it difficult to transform the trade foundation between China and Bangladesh into actual trade.It is necessary to increase the infrastructure construction and the establishment of special economic zones in Bangladesh to improve the relative transaction efficiency of Bangladesh.Third,if the two countries establish Free Trade Area,the overall net welfare of the two countries will increase with the agreement.However,as a big country,China will get more welfare in the welfare distribution,which is the inevitable result of free trade.Therefore,in the process of establishing Free Trade Area,more attention should be paid to the fairness of welfare distribution between the two countries.