Research On The Economic Effect Of "China-UK" FTA

Under the background of Britain’s "Brexit",this article mainly studies the feasibility and economic effects of the establishment of China-UK FTA.First of all,this paper gives a systematic introduction to the theoretical foundation involved,which provides a theoretical basis for the analysis of the feasibility and economic effects of the China-Uk FTA;Then,from the current China-UK trade volume,commodity import and export structure,combined with the Index of Comparative Advantage Index(RCA),Trade Complementarity Index(C),and Trade Integration Index(TCD),the feasibility of establishing FTA is analyzed in detail;then,Using the GTAP model to simulate the establishment of the China-UK FTA,measure the economic effects of the simulation of the elimination of tariff barriers and the reduction of technical trade barriers on the basis of removing tariff barriers.Analysis of the results of economic effects,trade flow effects,commodity structure effects and industrial structure effects;finally,summarize the research of the whole thesis,and puts forward the countermeasures corresponding suggestions.The research results show that: first,through the analysis of the current trade situation between China and Britain,it is found that the overall trade volume of China and Britain is on the rise,but the growth rate has slowed in the last three years.China’s exports to the UK are mainly based on mechanical and electrical products,furniture toys,textiles and raw materials,base metals and products.The UK’s exports to China are mainly transportation equipment,mineral products,electromechanical equipment and chemical products.From the index results,there is strong industrial complementarity between China and Britain.China’s export advantage products are mainly concentrated on labor-intensive products,and the export dominant products of UK are mainly in capital and technology intensive products.Though the degree oftrade combination between two countries is not very close,the trade combination degree of both sides is increasing rapidly.It is foreseeable that the market potential of trade is huge,and there is great room for development.Secondly,the empirical results show that in the macro economic effect,theestablishment of Sino British trade,elimination of tariffs and reduce technical barriers to trade,will have a positive impact on Britain,both GDP and the welfare level will be significantly improved,the two countries will also increase the amount of import and export,trade conditions are there are different degrees of improvement,but compared to Chinese,British degree of benefit is more important;in the aspect of trade flows,the establishment of Sino British FTA will promote Sino British bilateral trade volume increased greatly.But in a certain extent in the export of other economies of China and British,especially the decline in the amount of trade between the UK and the EU;in the commodity structure effect,trade in various industrial sectors will be increased greatly,especially the advantage of industrial sector was more obvious.China’s export advantages are concentrated in textiles,leather and wood products,mechanical and electrical products and other products.The export advantages of the UK are mainly concentrated on transport equipment,electromechanical products,chemical products and other products.In terms of industrial structure effects,China and the United Kingdom can give full play to their respective advantages in resource endowments and promote the optimal allocation of domestic resources.China’s output of textiles,leather and wood products will increase greatly,but the output of transport equipment,chemical products and electromechanical products will be greatly impacted.The situation in Britain and China is just the opposite.The output of transport equipment and electromechanical products in Britain will be significantly improved,but the output of textiles,leather,and wood products will be greatly affected.In short,the resource endowments and technology levels between China and Britain are quite different.There is strong complementarity in terms of economic and trade.The establishment of free trade area between the two countries will generate significant trade creation effect and greatly improve the economic growth of China and Britain.Therefore,China should actively promote the establishment of the China-UK FTA.