Research For The Impact Of Cross-strait Financial Cooperation On Bilateral Trade Development

In recent years, by the advent of increasingly frequent Cross-Strait economic and tradeexchanges, Report to the Eighteenth National Congress of the CPC has put forward topolicy toward Taiwan of “five policies not change”, and Taiwan has come up with thepolitical vision of “golden decade, cross-strait peace”. So a good economic and politicalenvironment has been created in Cross-Strait investment, trade and financial cooperationand communication. Especially, an extensive attention has been attracted in the fields ofCross-Strait financial cooperation and trade. Since the KMT returned to power in Taiwan,Cross-strait economic and financial cooperation has made remarkable achievements. Aseries of cooperation framework agreement signed, such as Cross-Strait financialcooperation agreement, Cross-Strait economic cooperation framework agreement andCross-Strait Agreement on Trade in Services, has promoted Cross-Strait trade and financialcooperation in-depth development.From perspective of the impact of Cross-Strait financial cooperation on bilateral tradedevelopment, this article discusses how to strengthen cross-strait financial cooperation andcommunication in order to promote the development of cross-strait trade. By analyzing thecurrent status of cross-strait financial cooperation and trade development, thus we find outproblems of the cross-strait cooperation and trade development, such as the mutualestablishment dissymmetry of financial institutions, future cross-strait political uncertainty,low levels of financial supervision cooperation, imperfect financial cooperant law, unevendevelopment of trade and so on. And then we consider that through economies of scale,technological advance, risk diversification and financial system and other mechanisms,cross-strait financial cooperation will have an conspicuous impact on bilateral tradedevelopment. Meanwhile through taking banking sector business cooperation as anexample, we illustrate the positive role of Cross-Strait financial cooperation on tradedevelopment. According to the collected cross-strait financial and trade data, VAR modelwas constructed to test the impact validity of cross-strait financial cooperation on tradedevelopment. The result show that Cross-Strait financial cooperation has been playing apositive role in promoting bilateral trade development. simultaneously, through using theimpulse response functions and variance analysis, their time delay relationship andinfluence degree of contribution can be found obviously. Finally, based on empirical resultsand the current cross-strait financial cooperation problems, from the perspective ofpromoting the development of cross-strait trade, we bring forward policy suggestions ofdeepen cross-strait financial cooperation.