China-asean Free Trade Area Context Yunnan - Asean Trade Effect Analysis

China - ASEAN Free Trade Area (China-ASEAN Free Trade Area, CAFTA) was established since China and ASEAN signed the "Framework Agreement on China-ASEAN Economic Cooperation" on November 4,2002, and would officially start on January 1,2010. Under the cooperaton framework of CAFTA, It wil have a great economic and political significance for both China and ASEAN, especially for Yunnan province which is as the bridge of China-ASEAN cooperation in the western of China. It will produce an important influence on Yunnan provinces and even other less developed provinces of western China in economic efficiency and competitiveness increasing.Therefore, this paper estimates the trade effect of Yunnan province under the framework of CAFTA from the aspect of the Yunnan province by beginning with the analysis on the provincial foreign trade status and commodity structure. First, we compare the foreign trade status of Yunnan and ASEAN in export product competitiveness, trade complementarities and the level of intra-industry by calculating Revealed Comparative Advantage Index, Trade Complementarities Index and Intra-industry Trade Index. Then, the gravity model is applied to assess the trade effects of the overall model and Yunnan sub-model before and after the establishment of CAFTA via regression of the bilateral trade flow panel data. Finally, according to the commodity structure of trade between Yunnan and ASEAN results choose Yunnan's exports to ASEAN's main product in Yunnan - ASEAN trade effects of trade gravity model analysis, focusing in-depth study to establish the China-ASEAN Free Trade Area of Yunnan Province, the main export products brought to impact.The following conclusions have been found beased on the above-mentioned analysis:There are certain similarities on export trade between Yunnan and ASEAN and also has a significant degree of the complementarity.Meanwhile, the establishment of China-ASEAN Free Trade Area has significantly promoted Yunnan and ASEAN bilateral trade. Institutional factors of regional economic cooperation contributes significantly to the progress of the bilateral trade between Yunnan and ASEAN, and the regional economic as well as the per capita income growth have motivated the development of the Yunnan-ASEAN trade and economic cooperation..Furthermore, regional cooperation has effectively promoted export of Yunnan's tobacco products, vegetables, fresh cutting flowers and other agricultural products.The rural income and the economic growth of Yunnan Province have been consequently generated. Therefore, this study proposes some policies from the government and industry to promote the trade between Yunnan and ASEAN. On government aspect,foreign trade should increase efforts to point to the sub-regional cooperation to promote all-round China-ASEAN regional cooperation; industries, speed up industrial upgrading, and optimizing the agricultural structure, agricultural industrialization, large-scale, diversification, and to optimize agricultural trade structure, promote the two sides complement each other.