China-Asean Free Trade Area

Regional economic integration and economic globalization are the two topics in international trade discussed widely. As more and more regional economic integration organizations are set up, the research on regional economic integration becomes more important.In November 2002, China and ASEAN achieved an agreement that the two sides will establish China-ASEAN Free Trade Area (shorted for CAFTA) in 10 years. CAFTA is the first regional economic integration organization that China joined formally, which is also one of regional organizations consisting mainly of developing countries. Its trade structure, trade effect and policy choice are the focus observed from several aspects, and as well as the objects this paper will study.Based on the theories of regional economic integration, and by means of theoretical and quantitative analytical method, this paper focuses on the structure of trade between China and ASEAN and the trade effect of CAFTA.The main conclusion is that China and ASEAN have their own competitiveness respectively and specialize in some of products. CAFTA will contribute to the growth of total trade and as well the increase of intra-industry trade between the two sides. According to the analysis, this paper draws a conclusion that China will make CAFTA successful by developing the intra-industry trade with ASEAN members.