The Feasibility of a Korea-China FTA and its Potential Economic Effects

This dissertation examines the feasibility and effects of the China-Korea free trade agreement (CK FTA) in various sectors of the two countries' economies using a general equilibrium model and incorporating the most recent Global Trade Analysis Project Database. Above all, both China and Korea's FTA strategies together with their respective FTA motives are elaborated, given by the demonstration and analysis of two countries' trade features, trade structures and bilateral investment. According to the analysis on Korea and China's trade relations, the industrial advantages and disadvantages between the two countries are matched against the Revealed Comparative Advantage index and Intra-Industry Trade index.

ABSTRACT



CHAPTER

1

Introduction

01. Background of Free Trade Agreements(FTA)

02. The Development of FTAs in the world

03. Background of China-Korea Free Trade Agreement

04. Paper Structures



CHAPTER

2

A Comparison between Korea and China's FTA strategies

01. Korea's FTA Strategy and Its Motivation

1.1. The Background of Korea's FTA strategy

1.2. The Features of Korea's FTA Strategy

1.3. The Motives of Korea's FTA strategy



02. China's FTA Strategy and Its Motivation

2.1. The Background of China's FTA Strategy

2.2. The Motives of China's FTA Strategy

03. A Comparison of Korea and China's FTA Strategies

3.1. Both FTA Strategies Share Multi-track Basis but Have Different Features

3.2. Both FTA Strategies are affected by Liberalization Process

3.3. Both FTA Strategies have Profound Political Considerations

3.4. Korea's FTA Process has a Comparative Advantage on its Strategic Tactics



04. Summary



CHAPTER

3

Economic Relations between China and Korea

01. Trade and Investment Patterns between Korea and China

1.1. Trade Status Quo between Korea and China

1.2. Trade Structures and Characteristics between China and Korea

1.3. Deepening Investment Relations

1.4. Trade Balance between China and Korea

1.5 Trade Policy



02. A Competitiveness and Complementariness Research of Korea and China's Industries

2.1. An Analysis of RCA Index

2.2. Technological Classifications of Exports

2.3. The Intra-Industry Trade Analysis between Korea and China



CHAPTER

4

Theoretical Analysis of the Korea-China FTA

01. Analysis from FTA Theories

1.1. Trade Diversion and Trade Creation

1.2. Domino Theory of FTAs

1.3. Rules of Origins (ROOs) and the Spaghetti Bowl Theory

1.4. Hub and Spoke Theory



02. Need for a Korea-China FTA: Alternative Thinking

2.1. Promotion of Bilateral Intra-Industry Trade and Comparative Advantages

2.2. A Buffer for the Economic and Political Tensions

2.3. Restructuring two Countries' Vulnerable Domestic Industries

2.4. A Proof from Regionalism



CHAPTER

5

Potential Economic Effects of a Korea-China FTA

01. CGE Models and Global Trade Analysis Project System

1.1. Introduction of the CGE model

1.2. The Global Trade Analysis Project (GTAP) and Its Model Structures

1.3. Existing Research on Korea-China FTA Using CGE Models

1.4. Model Aggregation for a Korea-China FTA



02. The China-Korea FTA's Potential Economic Impact

2.1. Economic Effects on Welfare

2.2. Economic Effects of a China-Korea FTA on Trade

2.3. Economic Effects of a China-Korea FTA on Outputs

2.4. Effects of a China-Korea FTA on Demand Changes for Production Factors



CHAPTER

6

Conclusions

01. Summary

02. Policy Implications

Acknowledgements



References

Appendix 1

Appendix 2

Zhao Jin long 저자 Zhao Jin long은 Doctor Zhao Jin long received his Ph.D at INJE University of South Korea. He is currently an Assistant Professor of School of Economics at Shanghai University. He got more that ten years teaching experience and has more than 5 years corporate and consultancy experience.



Academic and Professional Qualification

2005.9 ~ 2008.6 Doctor Course Study of International Business at INJEUniversity, SouthKorea.

2004.9 ~ 2005.7 Master Course Study of International Business at INJEUniversity, SouthKorea.

2002.9 ~ 2004.7 Master Course Study of International Law of Qingdao University, China.



Biography

Doctor Zhao has an excellent education background in International Economics and Business, being familiar with theory of International Economic Integration and Trade Policies. He has a very solid ability to providing personnel and organizational management and accomplishing training objectives with good experiences in personnel managements and organization with providing leadership and support.



Teaching and Professional Experience

Courses taught:

Oct 2008 ~ Current Shanghai University, China

MBA Program

Executive EconomicsGraduate Courses

Advanced International Trade Theory

International Trade Theory and PolicyUndergraduate Courses

Modern Economics China's Foreign Trade Macroeconomics Microeconomics WTO and China International Economic Cooperation

Working Experience

Economics, at Shanghai University of China

2006.4 ~ 2008.6 Training supervisor in Career Development Center of INJE University, Republic of Korea

2006.9 ~ 2008.6 Work as a senior trainer responsible for providing support to new trainees through mentoring, observation, and feedback for Shandong "ChengWang" Companyand Shandong "JianKai" Company and made great achievements

2005.9 ~ 2008.6 Perform as a senior counselor of China's Market and responsible for the market development of Korean P&H International Trade Company

2004.9 ~ 2005.12 Researcher of BK21 Program of Ministry of Education and Human Resources Development, South Korea

2002.10 ~ 2004.6 English and Law Training Lecturer in Adult Education Institute of Qingdao University

Publications

Articles

"South Korea-EU FTA's Impact on China's Foreign Trade", Northeast forum, No.4, 2011. CSSCI Journal.

"South Korea's FTA Strategy and its Motives", Korea Research, Fudan University, No.19, 3, 2011.

"South Korea-USA FTA's impact on China's Foreign Trade", International Business, No.3, 2009，CSSCI.

"The Economic Effects and Prediction of China-Korea FTA", Korea Research, Fudan University. No.19, 2, 2008.

"The Direction of China's FTA Strategy in Northeast Asia: a Comparative Research of CGE Model", Northeast Forum, No.4, 2008.

"The Potential Economic Effects of China-Korea FTA: GTAP Analysis", Korean Tradeand Commerce, Volume7, No.4, December, 2007, pp.47-77.

"An Analysis of Trade Competitiveness and Complementarities between Korea and China", Korean Trade and Commerce, Volume7, No.1, March, 2007, pp.3-27.

"A Comparative Research between Korea and China's FTA Strategies", Korean Tradeand Commerce, Volume 6, No.2, December, 2006, pp.111-142.

"Theoretical Analysis and Effect of Green barrier on International Agric-product Trade of China", Journal of University of Electronic Science and Technology of China(Social Sciences Edition), No.5, 2006.

"On Theoretical Analysis of SPS and International Agric-prod Trade in Post-transition Period", Business Research, No.23, 2006.