An Empirical Study On Sino - Thai Trade Effect Under The Situation Of China - ASEAN Free Trade Area

The Paper aim to study the trade relationship and effect of Sino-Thai trade under the context of China-Asean FTA, using RCA and IIT indicator to study the trade competitiveness and complementarity, plus with Gravity Model and Regional Economics Integration Theory to study the trade effect. The empirical analysis of this paper based on the statistic of2002to2011of Sino-Thai trade data, aiming to study in trade structure, competitiveness, complementarity and trade effects. First, trade structure study found that, China export is relying on pure manufactured goods satisfy Thailand market demand, especially in labor-intensive industries. While Thailand still adheres on its own advantages in agricultural and agro-processing products, along with some industrial products. In the future trend, China export will adhere concentration in labor-intensive industries, as well as Thailand that the exporter of machinery and electronic will engage with cost issues, meanwhile industrial restructuring. Second, competitiveness study found that, China major comparative advantage source are still in the category of labor-intensive industries. When in Thailand,his comparative advantage result in labor-intensive industries too, but more rely on industry to do with agricultural ones. Third, intra-industry trade study found that, two countries industry is verging toward intra-industrial approach, at least in the state of steady or better off way. Fourth, static trade study found that, China get more trade creation effect than Thailand. This can be described by difference in market scale and potential. However, Thailand get less trade diversion effect than China. So, conclusively, the net trade effect for China is positive, while for Thailand, the result is opposite way. This has indicated that China benefit from free trade zone, but Thailand is impaired. Finally, the dynamic trade effects study found that, one, economies of scale effect has improved efficiency, reduce costs, and raise competitiveness for both countries. It has helped two countries to achieve division of labor and product specialization. Two, competitive promoting effect has improved the allocation of resources for two countries; this has boosted up industrial efficiency, which will help accelerate the industry upgrading process. Three, investment stimulus effect will give two countries more volume of investment promoted inside, resulted in intra-investment and inter-investment effect. It has to be mentioned that, China investment effect that brought to Thailand is more obvious than the one Thailand brought to China.