FREE TRADE AREA BETWEEN CHINA AND EUROPEAN UNION: IDEA OR REALITY?

Abstract

This study based on realistic economic cooperation between China and the European Union, made the comparative study respectively on the bilateral trade, investment and cooperative trends in other fields, tried to find out the possibility for both economies to establish a free trade area. On this basis, by adopted the theoretical methods like the economic and trade complementarity analysis, economic factor endowment analysis and intra-industrial trade analysis to explore the possible economical basis and the cost-benefit outcomes for the potential FTA. Finally basing on the results of analysis, this paper provided some suggestions and recommendations for further research and the establishment of the potential FTA. Moreover, the results of this study show that: the recently closed bilateral cooperation between China and the European Union has laid a solid economic foundation for the establishment of the FTA. Meanwhile, the strong economic complementarity of the two economies also contributes to a win-win situation under the FTA framework. Therefore, based on the view of economics, the bilateral FTA should not be just seen as an idea but a reality, both economies could start to study the feasibility of the potential FTA.