China will also pay a price for continuing bilateral political friction. Japan has the comparative advantage in auto and electronics products, for which replacements from other countries are difficult to rely on, as evidenced by the disruption in the global electronic products market following a devastating tsunami which hit Japan in 2011. Against this backdrop, boycotting the imports of certain Japanese products will have an unintended impact on the Chinese economy, industries, exports and employment

Generally speaking, China's achievement in manufacture and export owes partly to its role in the international industrial chain. For instance, Japan supplies core components, which China then manufactures before exporting to the global market. Meanwhile, in the new wave of global industrial transfer and Chinese industrial upgrading, China has become a popular investment destination for international emerging industries and transferring destination for overseas advanced manufacture.

Forward-looking FTA

Currently, although the China-South Korea FTA is making significant progress, the FTA among China, Japan and South Korea has stagnated due to political confrontation between the three. Undoubtedly, all the political leaders and elites from the three countries understand that they share extensive common interests. Competition between the three sides should not allow for aggression, and instead emphasize benign economic interaction.

At present, uncertainties over the world economy—particularly emerging economies—are on the rise, and the whole East Asian region is facing an economic slowdown. Under these circumstances, the best way for the three leading economic powers of China, Japan and South Korea to pull through is to exercise cooperation to reduce their vulnerability to international financial crises. To this end, efforts should be made to accelerate financial cooperation in the region. In order to enhance the ability of East Asia to cope with economic crises, all parties should integrate the cooperation into the building of a China-South Korea FTA as well as a China-Japan-South Korea FTA. Once completed, the China-Japan-South Korea FTA will inject new vitality into the development of the regional economy. Setting aside historical and territorial disputes in favor of the pursuit of common economic interests will help create a stronger Northeast Asia.

In actual fact, China has the capacity to achieve sustainable growth of foreign trade and economy on its own by promoting domestic consumption. However, China would prefer to attract more partners to further promote regional economic stability and share the benefits of economic expansion.

Currently, the overdependence of East Asian economies on the U.S. and European markets has not only affected their economic autonomy but also hampered their efforts to reduce excessive reliance on the U.S. dollar.

To settle all these problems, East Asian countries need to further strengthen regional economic integration, moving away from the U.S. and European markets to focus on their own regional market. Thus, the importance of the China-Japan-South Korea FTA for regional economic integration is self-evident.

The author is a researcher with the Chinese Academy of International Trade and Economic Cooperation

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