Analysis On The Trade Effects Of CEPA Between Mainland And Hong Kong

Nowadays, the process of free trade areas is growing faster, and the regional economic cooperation in East Asia is becoming closer and closer. According to WTO statistics, up to now, more than 340 regional economic cooperation agreements have been subscribed in the world, with 90% done during the past 10 years. All the countries are attempting to join in regional cooperation in order to improve the terms of international trade and gain more benefits. After 30 years' reforming and opening to the world, China has gained great achievements, while she only joined in few free trade areas. As a more and more important role in the world, Chins also should conform to the trend of regional integration and promote the regional and bilateral economical and trade cooperation.Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA for short, the same below) is the first document subscribed by mainland of China, which began in June, 2003. It has experienced five stages in the four years. As a free trade agreement with higher standard, a lot of measures on commodity trade, service trade and trade and investment liberalization have been taken effectively, which not only has promoted bilateral trade and economic development, but also have supplied mainland with rich experience in joining free trade areas. By reviewing the trade effects of CEPA, we can not only appraise the impact of CEPA correctly and help to seek further cooperation, but also obtain some useful information to establish "Great China Economic Sphere" and develop more free trade agreements with other countries and regions in the world.This paper is composed of six parts. After basic introduction about significances of the topic and a brief review of the previous studies in the first two parts, the main contents and characters of CEPA were listed in the third part, as well as the trade status between mainland and Hong Kong. In the fourth part, an academic analysis about CEPA was done, with a conclusion of obvious trade creation effect. In the fifth part, an empirical analysis was done by calculating regional trade percent, usingBalassa model and calculating Revealed comparative advantage (RCA) and TSC, with a similar conclusion. At last, some suggestions on CEPA in the future were given.The main contributions of this paper are as follows. On the first hand, on base of the different features of CEPA, referring to the methods in international economics and integration economics, this paper gave an academic analysis about CEPA. Secondly, in the part of empirical analysis, the most updated data was used as well as service trade was involved.