The Study On The Economic Effect Of China’s Accession To RCEP

Since the 2008 global financial crisis,the global economy has suffered setbacks with WTO negotiation in deadlock,global economic integration stagnant and anti-globalization on the rise.These setbacks have brought about new challenges to globalization and downward pressure on economic development.As the free movement of capital and traded goods based on the WTO platform brings only limited benefit to their economy.Many countries started signing regional trade agreements,as a new strategy to improve their own economic development.Among these agreements include the Comprehensive Progressive Trans-Pacific Partnership(CPTPP)and the Regional Comprehensive Economic Partnership(RCEP),two large scale free trade agreements under development in the Asia-Pacific region.As China’s economy entered a “New Normal”with new challenges,it will be a right choice for China to join the RCEP so as to cope with the complex situation both at home and abroad.This study focuses on: 1.China-RCEP member states economic and trade cooperation and competition trends;2.influence factors’(especially China-RCEP member states trade cooperation and competition)impact on bilateral import and export and China-RCEP trade efficiency and potential;3.the impact of China’s accession into RCEP on China’s macro economy;4.targeted strategic suggestions.In order to keep the pre-analysis and post-hoc analysis of the product department classification to be consistent,according to the corresponding relationship between SITC and HS code provided by the world bank,as well as the corresponding relationship between GTAP department classification and HS code,more than 5000 product codes are classified in detail and tediously.The study has certain innovations in the following three aspects: first,the competitiveness and complementarity of China and RCEP member countries’ imports and exports are comprehensively analyzed with the revised trade competitiveness index and the revised trade complementarity index as important indicators.Then the revised trade competitiveness index and trade complementarity index are taken as explanatory variables of the stochastic frontier gravity model for an empirical analysis of the influence factors of China-RCEP member states trade and the efficiency and potential of China’s export and import with RCEP states.Second,the analysis provides an empirical simulation of the economic impact of China’s entry into the RCEP.The general equilibrium model-GTAP model is used to pre-analyze the establishment of the RCEP.The different situations under which the RCEP can be established are simulated and analyzed,including the impact of reducing tariff barriers and technical barriers to trade on the RCEP member states.Then the analysis goes on to cover the future economic impacts of the RCEP expansion.Third,China serving party-B model is proposed for the successful development of China’s FTA strategy.This dissertation starts with the economic theory and research methods of China’s entry into the RCEP with a special focus on Customs Union,Trade Gravity Model and GTAP Model.These theories lay a foundation for the research framework of this dissertation and help us analyze the benefits of China’s entry into the RCEP from the perspective of trade.This dissertation also analyzes China’s economic and trade cooperation with the RCEP member states,including the import and export between China and the RCEP member states,and their foreign direct investment(FDI).With a focus on China-RCEP member states trade cooperation and competition,the revised China import and export trade competitiveness index and trade complementarity index are calculated to provide data support for subsequent empirical analysis.This dissertation also provides analysis of the realistic reasons for China’s entry into the RCEP.In this study,post-hoc analysis are used and the revised trade competitiveness index and trade complementarity index are taken as explanatory variables of the stochastic frontier gravity model for an empirical analysis of the influence factors of China-RCEP member states trade and the efficiency and potential of China’s export and import with RCEP states.The game model is used to explain prisoner’s dilemma in which,under such a dilemma,a free trade agreement can be more effectively reached if a third-party can be introduced to take the role as party A,while China serves as party B rather than party A.Therefore,China serving party-B model is proposed in this study for the successful development of China’s FTA strategy.This dissertation also provides an empirical simulation of the economic impact of China’s entry into the RCEP.The general equilibrium model-GTAP model is used pre-analysis of the establishment of the RCEP.The different situations under which the RCEP can be established are simulated and analyzed,including the impact of reducing tariff barriers and technical barriers to trade(non-tariff barriers)on the RCEP member states(especially China).Then the analysis goes on to cover the impact of the return of India to the RCEP on the member states,the economic impact of Hong Kong’s accession in to the RCEP,and the future economic impacts of the RCEP expansion towards the United States,Russia,and the European Union.This dissertation provides six research findings.First,China’s imports and exports are facing dual competition from both developed members of the RCEP(Japan,South Korea,Singapore)and emerging economies(Vietnam,Philippines,Malaysia,etc.).Second,there is a clear positive correlation between China-RCEP member states trade competition or complementarity and their imports or exports.Third,joining the RCEP is a successful case of China’s implementation of the FTA strategy using China serving Party-B model.Fourth,China’s accession to the RCEP can significantly improve China’s economic development.Fifth,joining the RCEP and reducing non-tariff measures among member countries will have a greater impact on China than reducing tariffs.Sixth,after the establishment of the RCEP,the levels of macroeconomic indicators of member countries in the region will generally rise,while the levels of macroeconomic indicators of countries outside the region will mostly decline.In conclusion,this dissertation puts forward four policy suggestions based on the research findings.First,to actively deal with the China-RCEP member states trade competition,both Chinese government and enterprises should make their contribution to improving China’s competitiveness in foreign trade.Second,the markets and resources of RCEP member states should be fully utilized as new impetus to the stable development of China’s foreign trade.Third,the reduction of trade barriers should be encouraged among the RCEP member states as a proper respond to CPTPP and China should gradually upgrade the RCEP agreement,and participate in and lead the establishment of new international trade rules.Fourth,the RCEP should be integrated with the Belt and Road Initiative so as to improve China’s FTA strategy and make China the center for a new FTA network.