How Far is Asia Already Surrogate Trade Bloc?
LI Chunding, John Whalley

This paper is the first exploration to numerically calculate the Debreu (1951) coefficient, and to introduce Debreu distance indicator in free trade agreement (FTA) effect measures. In the meanwhile, FTA negotiations in Asia developed very fast in the past decade which made it important to evaluate how far Asia has already surrogate trade bloc. This paper uses a fifteen-country global general equilibrium model with trade cost to numerically calculate Debreu distance between present situation and potential Asia trade blocs, so as to evaluate these Asia FTA effects. Our calculation results reveal that all Asia involved countries will gain from Asia trade bloc arrangements unless these FTAs can only eliminate tariffs. These countries’ gain will increase as non-tariff elimination deeps. Larger countries will gain more than small countries. Asia FTA, Asia Union and RCEP will benefit member countries more than ASEAN+3. Global free trade will gain all countries the most ... [full text]

China and Global Mega Trade Deals
Chunding Li, Jing Wang, John Whalley

The term “mega deal” has been widely used in relation to large prospective trade deals between the US and Europe (the Transatlantic Trade and Investment Partnership ; TTIP) and in Asia and the Pacific (Trans-Pacific Partnership; TPP). Here we both argue that the phenomenon of mega deal is much broader than just these two (admittedly large) prospective deals, and we discuss the implication for China of the potential changes in the global trade regime spreading mega deals could imply. We include both deals from which China for now is excluded (the two above) and the mega deals that China could become involved with over the next decade. We emphasize that negotiation on these deals may be slow and may not conclude, but if the pressures for these deals to conclude accelerates as may often occur then the global trading system will be significantly changed ...[full text]

China and the TPP: A Numerical Simulation Assessment of the Effects Involved
Li Chunding

The Trans-Pacific Partnership (TPP) is a new negotiation on cross border liberalization of goods and service flows going beyond WTO disciplines and focused on issues such as regulation and border controls. This paper uses numerical simulation methods to assess the potential effects of a TPP agreement on China and also China’s inclusion or exclusion on other countries. We use a numerical 11-country global general equilibrium model with trade costs and inside money. Trade costs are calculated using a method based on gravity equations. TPP barriers potentially removable are trade costs less tariffs. Simulation results reveal that China will be slightly hurt by TPP initiatives in welfare when China is out, but the total production and export will be increased. Other non-TPP countries will be mostly hurt in welfare but member countries will mostly gain. If China takes part in TPP, she will significantly gain and increase other TPP countries’ gain as well. The comparison of TPP effects and global free trade effects show that the positive effects of global free trade are stronger than TPP effects. Japan’s joining TPP would be beneficial to both herself and most of other TPP countries, but which negative effects on China’s welfare when out of TPP will increase further ... [full text]

China playing central role in free trade
Zhang Lin

China is a latecomer in terms of reaching free trade agreements with other economies. But it has sped up in recent years with the signing of a few landmark FTAs with countries and regions including Switzerland, South Korea and Australia ... [full text]

China's Regional and Bilateral Trade Agreements
Li Chunding, Wang Jing,  John Whalley

China has been increasingly active on the regional trade agreement front over since WTO Accession occurred in 2001. These agreements, unlike the US and EU cases, follow no template form of agreement but vary substantially one among the others and are in part an attempt to customize agreements to partner prior agreements. There are presently 12 concluded agreements, 6 under negotiation, and four others under consideration. These concluded are in the main with smaller countries. Those in prospect are with major trading areas (US, Japan, Korea, and India). All are driven in part by China’s needs for export access to fuel continuing export lead growth, but other elements enter including using regional agreements to offset unwelcome elements of multilateral arrangements (such as the non-market economy labelling), and attempting to put in place via RTA building blocks an Asian trading hub. Outstanding issues not centrally addressed by these agreements include anti-dumping duties, and investment and competition issues ... [full text]

Numerical General Equilibrium Analysis of China’s Impacts from Possible Mega Trade Deals
Li Chunding, Wang Jing, John Whalley

This paper explores the potential impacts on both China and other major countries of possible mega trade deals. These include the Trans-Pacific Partnership (TPP), the Regional Comprehensive Economic Partnership (RCEP), and various blocked deals. We use a numerical 13-country global general equilibrium model with trade costs to investigate both tariff and non-tariff effects, and include inside money to endogenously determine imports on the trade imbalance. Trade costs are calculated using a method based on gravity equations. Simulation results reveal that all FTA participation countries will gain but all FTA non-participation countries will lose. If non-tariff barriers are reduced more, the impacts will be larger. All effects to China on welfare, trade, export and import are positive. Comparatively China-TPP and RCEP will yield the highest welfare outcomes for the US in our model, China-Japan-Korea FTA will generate the second highest welfare outcome, and China-US FTA will generate the third highest welfare outcome. For the US, China-TPP FTA will generate the highest welfare outcome. For the EU, all China involved mega deals have negative impacts except China-US FTA. For Japan, RCEP will generate the highest welfare outcome. For both Korea and India, RCEP will generate the highest welfare outcome ... [full text]

The Armington Assumption and the Size of Optimal Tariffs
李春顶  Jing Wang  John Whalley

There has been commentary on the seeming success of the world trading system responding to the large shock of the 2008 financial crisis without an outbreak of retaliatory market closing. The threat of large retaliatory tariffs and fears of a 1930s style downturn in trade have been associated with numerical trade modelling which project post retaliation optimal tariffs in excesses of 100%. In the relevant numerical modelling it is common to use the Armington assumption of product heterogeneity by country. Here we argue and show by numerical calculation that the widespread use of this assumption gives a large upward bias to optimal tariffs, both first step and post retaliation, relative to alternative homogenous good models used in trade theory ... [Full text]

The Impact of BITs and DTTs on FDI Inflow and Outflow: Evidence from China
Hejing Chen  李春顶  John Whalley

This paper examines the impact of both China’s bilateral investment treaties (BITs) and double tax treaties (DTTs) simultaneously on China’s bilateral Foreign Direct Investment (FDI) inflows and outflows. Using China bilateral FDI flow data from 1985 to 2010, we find that the cumulative number of bilateral investment treaties (BITs) China signed has a positive (though not always statistically significant) but minor impact on both China’s FDI inflows and outflows. The effect of a dummy BIT using dyadic data is always significant and positive for China’s FDI inflows, while negative but not always significant for China’s FDI outflows. We also find evidence that the cumulative number of double tax treaties (DTTs) tends to promote China’s FDI inflows and outflows in most equations with weighted cumulative BITs. However, tax treaty dummies do not reveal any robust effect on FDI flow. Generally, BITs and DTTs are more inclined to affect China’s FDI inflows than to affect China’s FDI outflows ...[Full text]

A Great Power Mentality towards TTP
Dong Yan

Initiated by the US, the Trans-Pacific Partnership (TPP) took shape on October 5, 2015. This has attracted wide attention and flared up extensive discussions among all circles in China. Some feel pessimistic, some deem TPP as a threat, while others sniff conspiracy. Such fear of TPP in China may be attributable to the US’s high profile in publicity of TPP as an internal political game. However, this is also due to the information asymmetry between the academic circle, the government and the public. It was similar to the current suspicions and disputes when China’s academic circle came to know and began their research on TPP several years ago. Five years of researches have provided findings in respect of TPP’s impact, cause and countermeasures. In the meantime, the Chinese government has gradually established a series of strategic schemes to respond to talks on such high standard international economic and trade treaties as TPP. China is not the one it used to be 15 years ago when it first entered the WTO. China has grown into a major player of global economic influence, with the necessity and the capacity to take the lead in pushing forward a new pattern for global economic and trade governance. We should develop a great power mentality towards challenges brought about by TPP, and be more active, confident, tolerant and cooperative.....[Full text]

Interpretation of TPP Summary
Su Qingyi


Discussed in closed-door negotiations, the full texts of the Trans-Pacific Partnership (TPP), which involves 12 countries including the US, Japan and Canada, have not been available. So far, the Office of the United States Trade Representative has only published a TPP summary, revealing the TPP includes 30 chapters. Following the publication of the English summary, some media and social organizations in China translated it into Chinese for the information of the public. On October 13, the Department of International Trade & Economic Affairs under MOFCOM also published the official Chinese version of TPP summary. Here is a concise interpretation of the TPP summary based on the official translation......[Full text]

Is China Ready for TPP?
Ni Yueju


In addition to setting the goal of free trade in goods, TPP includes trade in service, intellectual property rights, environmental protection, labor standards, and fair trade. Despite the fact that the parties somehow “sacrificed” high standards and allowed transition periods for zero tariff of certain productions to reach the agreement as soon as possible, TPP can still be seen as the top standard global free trade zone treaty in terms of the parties’ promise of cutting tariff and coverage of the treaty......[Full text]

TPP: Where Does It Come from and Where Does It Go?
Zhang Lin


TPP is a regional cooperative treaty signed by several countries under the framework of APEC and was originated from the bilateral Closer Economic Partnership (CEP) between Singapore and New Zealand. At APEC Leadership Summit in Mexico in 2002, leaders of Chile, Singapore and New Zealand announced P3-Closer Economic Partnership (P3-CEP) talks. In 2005, Brunei officially joined the 3rd round P3-CEP negotiation. In July of the same year, the four countries signed the Trans-Pacific Strategic Economic Partnership as Pacific-4 (P4), which took effect in December 2006......[Full text]

High-tech cooperation stimulates China-US relations
Ni Yueju


During President Xi Jinping's recent visit to the United States, cooperation based on promoting and facilitating American high-tech exports to China has great potential to stimulate development of the bilateral relationship in accordance with the principles of "no conflict, no confrontation, mutual respect and win-win cooperation."

During the past 36 years since the establishment of bilateral relations, cooperation between the two countries has undergone unprecedented development through mutual learning and exchanges......[Full text]

China, Japan, ROK shoulder heavy responsibilities in FTA
Ni Yueju


The resumption of the trilateral summit of the Chinese, Japanese and South Korean leaders should be seen against a background of a complicated and sensitive international situation and a sluggish global economy.

It highlights the sincere efforts of the leaders of the three countries to strengthen regional cooperation, maintain regional peace and stability, and drive economic development in Asia and even in the wider world. It also offers hope to the negotiations of the trilateral Free Trade Agreement (FTA) now making slow progress......[Full text]