China-ASEAN strengthening trade relations

China-ASEAN strengthening trade relations

China is looking to boost its already successful alliance with Association of Southeast Asian Nations (ASEAN) countries, announcing its intention to deepen their strategic partnership.

Trade volume between the two sides jumped from less than $8 billion in 1991 to $684.6 billion in 2020. In 2020, ASEAN and China became each other’s largest trading partners.

After the Regional Comprehensive Economic Partnership (RCEP) agreement – a comprehensive trade deal between 10 ASEAN member states plus China, Japan, the Republic of Korea, Australia and New Zealand – officially came into effect at the beginning of this year, the prospects for China and ASEAN were boosted by the promise of even closer economic ties.

Customs data showed that in the first quarter of 2022, China’s imports and exports to ASEAN reached 1.35 trillion yuan ($202.2 billion), an increase of 8.4% year-on-year, accounting for 14.4% of China’s total foreign trade.

During the period, the figures show that trade between China and ASEAN accounted for 47.2%, or nearly half, of China’s foreign trade with its Regional Comprehensive Economic Partnership (RCEP) partners, according to the data. As well as China, the RCEP countries are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam (all Asean counties), plus Japan, India, South Korea, Australia and New Zealand.

In November 2021, to mark the 30th anniversary of the initial ASEAN-China negotiations, the two sides jointly announced the establishment of a China-ASEAN comprehensive strategic partnership, a new milestone in their relations.

 

Strong and closer ties

At a summit held at the end of May, ASEAN Secretary-General Lim Jock Hoi said: “The economic relations between ASEAN and China have never been stronger and closer than today.

“In response to the fast-changing global economic landscape in the post-pandemic era, ASEAN and China are moving towards a new forward-looking partnership,” he said. “The scope of this partnership is wide-ranging and includes many emerging priorities such as resilient supply chains, [the] digital economy and sustainability.”

And China’s Commerce Minister Wang Wentao, speaking at the 28th trade ministers’ meeting of the Asia-Pacific Economic Cooperation council, said the country is “actively building the Version 3.0 China-ASEAN FTA with ASEAN members”.

“The country stands ready to advance pragmatic co-operation with all parties to boost regional economic integration, promote economic recovery in the region, and maintain regional peace and stable development,” said a spokesperson for the ministry.

“China remains open to any regional economic initiative that conforms to the aforementioned principles.”

 

Targeting sustainable development

ASEAN countries are also pledging to work with Beijing to implement the Chinese-proposed Global Development Initiative in a bid to accelerate the UN 2030 Agenda for Sustainable Development.

A recent economic report forecast growth among the member states of ASEAN, China, Japan and the Republic of Korea (ASEAN+3) at 4.7% this year and 4.6% in 2023, with growth for ASEAN at 5.1% and 5.2%, respectively.

The regions can look forward to a fuller opening-up and a strong economic recovery, according to the ASEAN+3 Regional Economic Outlook 2022.

To build a more resilient and sustainable ASEAN-China economic partnership, the two sides should jointly promote wider regional economic integration under the RCEP framework and further enhance infrastructure, said Satvinder Singh, ASEAN deputy secretary-general.

China and ASEAN have committed to promoting regional trade, co-operating and bring increased prosperity to people in the region since they started working together in 1991.

In 2002, China and ASEAN agreed to the setting up of the China-ASEAN Free Trade Area (FTA), which came into effect in 2010. It created the world’s largest free trade area, through which 90% of the goods between China and ASEAN countries are traded at zero tariffs. Previous restrictive measures on services and investment were also substantially lifted.