The analysis on trade effect of China-ASEAN free trade agreement-based on the gravity model
University of New Brunswick
Globalization and regional integration are irreversible trends for the world economy. Free trade agreements play crucial roles in promoting trade liberalization and regional economic cooperation. In this report, the bilateral trade between China and 16 trading partners is analyzed for the period 1998-2014. Gravity model is used to reveal the economic effect of China-ASEAN free trade agreement (CAFTA). Ordinary Least Squares (OLS) and Generalized Method of Moments (GMM) estimation methods were applied in the analysis. The empirical results showed that the trade effect of CAFTA was not obvious. China and ASEAN members need to formulate further actions to facilitate bilateral trade.