A Computable General Equilibrium Analysis Of Singapore’s Investment In China: Base On The Investment Liberalization

The 21st century, FTA(free trade agreement) has been the main feature of the regional economic integration. To meet the new development, China has been building FTAs with some countries and regions, the CAFTA is the most attention in them. Singapore which is the best developed country in ASEAN is the important investment source for China and maintains the top five for many years. In 2008, Singapore’s actual investment in China was more than four billion and four hundred thirty five million dollars, ranked third in all countries and regions which invested in China. On october 23 in 2008, after eight rounds hard and honest consultations between China and Singapore, the two governments signed the‘Free Trade Agreement Between the Government of the People’s Republic of China and the Government of Singapore’. On august 15 in 2009, China and ASEAN signed investment agreement, the agreement promotes the convenient and liberalization of Singapore’s investment in China.In the backdrop of agreement on investment between China and ASEAN, in this paper, base on the Dynamic CGE Model of China (MCHUGE model), we distinguished investment-led and technology-led growth effects, evaluated the effects of liberalization of Singapore’s investment in China for the country’s macroeconomic and industrial development.We find that in the back of current financial crisis, the investment liberalization between China and Singapore can promote our economic recovery as soon as possible, it can also hold our economy fast and steady development. At the macro level, further investment liberalization between China and Singapore will increase our GDP, stimulate consumption, expand domestic demand, increase employment, improve welfare of the residents and increase import and export. At the industry level, on the contray of before ideas, the expansion effects of the domestic market will increase the output of the electronic information industry and expand domestic demand, but reduce employment in this industry. That need the government pay great attention to it, improve our social security system and employment policies to reduce the negative impact on employment. It will promote our country’s adjustment of industrial structure, simulate the development of services and technology-intensive industries, but inhibit the output growth of textile, clothing and other traditional manufacturing.