Research On The Impact Of China-Korea Free Trade Area On Bilateral Investment

By the great success of the process of European integration, the wave of global integration has gradually risen, and the heads of governments have increasingly attached importance to the development of regional integration strategies. From a geopolitical point of view, the world economy is divided into Europe, North America, and East Asia.Among them, China is the largest and one of the most influential economies and it has been making different attempts and efforts for the construction of East Asian economic integration.According to the results of the relevant literature, it is shown that the construction of East Asian economic integration has a positive effect on the whole East Asian economy and can increase the welfare level in the area.However, compared with the European Union in Europe and NAFTA in North America, East Asian economic integration developments still in the Southeast Asian Union stage.According to this,China has made great efforts to promote the process of East Asian integration. China has signed a free trade zone agreement with ASEAN and then advocated the establishment of China-South Korea, China- Japan Free Trade Area and the ASEAN 10+3 framework.Among them, the signing of the China-Korean FTA Agreement is a milestone event.China is the world’s second largest economy and the largest developing country with a large population, while South Korea is ranked 14th in the world, having advantages in electronics, automobile manufacturing and other areas of technical. After the implementation of the FTA, the two countries will be a GDP of up to 14 trillion US dollars with population of more than 1.35 billion,such a large market space will usher in large-scale investment opportunities. The lack of investment in the region restrains the further development of the East Asian region as a whole while FDI is an important link in maintaining production value chain and promoting cooperation in production areas.Compared to the China-Swiss FTA, China-New Zealand FTA, China-Australia FTA,China- Korea FTA has a larger scale, involving a wider range and greater impact on China’s bilateral investment.This paper focuses on the study of the bilateral foreign direct investment between China and South Korea under the impact of two countries’ free trade area zone. In the first chapter, the author introduces the theory of regional economic integration,international direct investment and regional integration on the impact of investment,which provides the theoretical basis for the analysis of the article. Secondly, in the second chapter, author studied from the the contents of China-Korea Free Trade Agreement in three perspective of goods, services and investment so that pave the way for the investment impact of the FTA. The third chapter introduces the status of bilateral investment, including the development process, characteristics and current situation,which also lay the foundation for the study of the impact of the FTA. The fourth part discussed the static and dynamic aspects of the impact of FTA. Finally, the fifth part give the corresponding policy recommendations under the background of FTA.