A Dynamic Analysis Of The Trade Relationship Between China And Asean Under The Condition Of Cafta

China-ASEAN Free Trade Area is the world’s largest free trade area among developing countries, whose performance will have a significant demonstration effect on the building of regional economic integration within other developing countries. This paper based on the dynamic analysis of trade relationship between China and ASEAN under the condition of CAFTA, summed up the combination points to promote mutual market support, and put forward some suggestions on the sustainable development of the trade relationship between China and ASEAN.Based on CAFTA’s status trade situation, this paper used regional revealed comparative advantage index (RRCA), trade complementary index (C) and intra-industry trade index (GL) to measure the trade competition and complementarity between china and ASEAN according to Lall’s product classification method, which focus on the skill level of different products. Here, ASEAN just mean the main countries in the Southeast Asian Nations, including Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. And emphatically, this paper also focuses on a comparative study of intra-industry trade influencing factors in different products by using a panel model.The research results show that China and ASEAN’s trade competition and complementarity coexist, moreover, competition has become increasingly evident. China’s manufactured products have become more and more popular in ASEAN, and the level of intra-industry trade is becoming higher, but the competition in medium-technology manufactures (MT) and high-technology manufactures (HT) is expanding. The estimation of panel model shows that, the expanding of the difference in economic size (DGDP) of trading partners does not have the expected negative effects on china-ASEAN’s IIT level; and FDI has the most obvious effect on IIT, according to the different purpose of investment, ASEAN’s investment in China promotes the IIT level in LT and HT manufactures, but, reduces MT’s IIT level; and China’s investment in ASEAN promotes resource-based manufactures (RB)’s and HT’s IIT level; the openness (OPEN), measured by the degree of dependence on foreign trade as a proxy variable of the level of regional economic integration, only has a positive effect on RB manufactures’intra-industry trade; and finally, the education investment (EDU) just promote the IIT level of HT manufactures.