The Development And Effects Of CEPA In The Past Decade Since The Implementation

CEPA is an arrangement of economic and trade under the principle of WTO and the frame of “one country, two systems” between the two independent customs areas within a sovereign state. The signing of CEPA,which included the main contents of goods trade, service trade liberalization and investment facilitation, marks the economic and trade cooperation between Mainland China and Hong Kong has changed from the functional integration of the market into the market and institutional integration. Due to the wide open fields and deep level, CEPA provides a new impetus and space for the further development of economic and trade cooperation between the two places.On the basis of the relevant theories, this paper firstly describes the main contents of CEPA and its latest development, then analyze the development of economic and trade relations between Mainland China and Hong Kong and the effect in decade since the implementation of CEPA theoretically. At last by using the Balassa Model and co-integration test the paper analyze the trade creation and trade diversion effects of CEPA on Mainland China and Hong Kong. The method of exponential analysis and co-integration test are used to discuss the dynamic effects of CEPA. And this paper explore the innovation and upgrading of the implementation mechanism of CEPA in the new situation.The results of the study are as follows: first of all, CEPA promoted domestic exports to the Mainland China, and promoted the development of bilateral trade in services, promoted the steady development of Hong Kong’s investment to Mainland China, individual visit scheme promoted the development of the tourism industry in Hong Kong. However, the effect of CEPA was not as good as it’s expected, the overall scale is decreasing. Second, in decade since the implementation of CEPA, Hong Kong got the trade creation effect and Viner’s trade creation effect in both the merchandise trade and the trade in service, there is no trade diversion. Mainland China got the trade creation effect in the service trade with Hong Kong. The empirical analysis shows the existence of the trade creation effect and that there is no trade diversion of CEPA on transportation industry of Hong Kong. Third, CEPA promoted the further development of advantageous industries in Hong Kong, enhanced the complementarity and competitiveness of products in the trade between the two places, promoted the steady development of the trade between the two places. The empirical results show that economic and trade cooperation between Mainland China and Hong Kong has a positive effect on the economic growth of Hong Kong. What’s more, In the new situation, open innovation measures or mechanisms "try first", establishing Guangdong Pilot Free Trade Zone, the management model of pre-establishment national treatment with a negative list strengthen the positive effects of CEPA, promote the further cooperation between Mainland China and Hong Kong.