A Decade of Transformation: Changes in Bilateral Trade Structure and Evaluation of the Korea-China FTA

Young gui Kim, Jihyun Jung, Xingchen Li and Jie Hao
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Young gui Kim: Korea Institute for International Economic Policy
Jihyun Jung: Korea Institute for International Economic Policy
Xingchen Li: Institute for International Economic Research, NDRC
Jie Hao: Institute for International Economic Research, NDRC

East Asian Economic Review, 2025, vol. 29, issue 4, 487-522

Abstract: Amidst the pervasive expansion of global uncertainty, trade and the associated division of labor between Korea and China are undergoing significant structural transformations. To accurately estimate the Korea-China Free Trade Agreement's effect, this study controlled for these various confounding factors to isolate the specific impact of the agreement on bilateral trade. We employed a multifaceted methodological approach, incorporating techniques such as Two-Way Fixed Effects (TWFE), the Staggered Difference-in-Differences (Staggered DiD) framework, and event study analysis. Furthermore, the scope of the investigation was delineated by analyzing both aggregate trade flows and trade disaggregated by end-use. The findings confirm that even when juxtaposed against underlying structural changes in both economies and the prevailing uncertainty in the global trade landscape, the Korea-China Free Trade Agreement successfully acted as a stimulant for bilateral trade.

Keywords: Korea-China FTA; Korea-China Trade; Gravity Equation (search for similar items in EconPapers)
JEL-codes: C23 F13 F14 F15 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ris:eaerev:021988

DOI: 10.11644/KIEP.EAER.2025.29.4.457

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