The Study On Economic Effects Of China, Japan And South Korea Regional Economic Integration

Under the impetus of the economic globalization, regional economic integration develops rapidly and becomes a typical feature of the world economy. With the interdependent degree increasingly deepening, economic trade exchanges between countries have become closer and closer to each other. The WTO's Doha round bursting makes the fast development of regional economic integration organizations which are represented by Free Trade Area. Every country is involved in the wave of FTA. East Asia, Europe and North America are listed as the world's three largest economic sectors that have an immeasurable effect on the development of world economy. But East Asia's regional cooperation is lags far behind the other two regions. Europe and North America respectively gave birth to the European Union and North American Free Trade Area which are the two biggest economic cooperation organizations in the world. East Asia only has the "ASEAN 10+3" mode to promote regional economic integration. China, Japan and South Korea are all in East Asia with large scale of economy and close trade ties. They have had the basis to establish Free Trade Area. However, the construction process of China, Japan and South Korea Free Trade Area is very slow due to multiple obstacle factors. Whether from the point of adapting to the external competition or from the view of developing own economy, the establishment of China, Japan and South Korea Free Trade Area has become an inevitable trend. In this context, the study on economic effects of China, Japan and South Korea regional economic integration has a realistic significance.Based on the theory of customs union, this paper uses qualitative and quantitative analysis methods to analyze the driving factors and obstacles to the establishment of China, Japan and South Korea Free Trade Area.Combining post analysis with advance prediction to do the emprical analysis, use the trade gravity model to analyze the trade potential of China, Japan and South Korea while use the GTAP model to predict the economic effects of China, Japan and South Korea FTA. Through analysis, this article finds that:China, Japan and South Korea are in a trade surplus situation on the whole and market potential has been fully developed under the existing condition, the three parties need to build FTA for the further development of bilateral trade; China, Japan and South Korea FTA can promote the trade of China, Japan and South Korea, and import trade growth rate is higher than the export trade rate; China, Japan and South Korea's welfare level will be improved because of the establishment of free trade area and the well-being of other countries outside the region will decline. However, the world's overall welfare will improve; China's terms of trade will deteriorate due to the establishment of free trade area while Japan and South Korea's terms of trade will improve; Degree of regional economic integration has positive correlation with the level of economic growth and welfare improvement. The higher the degree of regional economic integration of China, Japan and South Korea is, the higher the level of economic growth and welfare level will be. The establishment of China, Japan and South Korea Free Trade Area can promote China's foreign direct investment, it can also contribute to realize the optimal allocation of resources, improve the production efficiency, accelerate enterprise competition and achieve economies of scale for China, Japan and South Korea.