China-ASEAN free trade area brings in new, greater opportunity

A total population of 1.9 billion, an aggregate Gross Domestic Product (GDP) of nearly 6 trillion US dollars and some 7,000 zero-tariff items … The China-ASEAN (Association of Southeast Asian nations) Free Trade Area would be operative in 2010 as scheduled. Then, what new, greater development opportunity would be wrought by this free trade area with the world's largest population in a region?

Out of this strategic consideration, the leaders of China and 10 ASEAN member nations inked the Framework Agreement on Comprehensive Economic cooperation and they decided to set up the Sino-ASEAN Free Trade Area in November 2002.

Thanks to joint, concerted efforts made by China and the ASEAN nation to date, the Sino-ASEAN Free Trade Area will be completed and turn operative as scheduled, and this will certainly lay a solid foundation for an all-round promotion of friendly ties between China and ASEAN, said Zheng Junjian, secretary general of the Secretariat of the China-ASEAN Expo.

The establishment of the free trade area will not only help promote the comprehensive cooperation between China and ASEAN but also spur the cooperation between ASEAN nations Plus China, Japan and the Republic of Korea (10+3) and the development of prosperity of Asia and the world at large, according to Dr. Gu Xiaosong, vice-president of the Guangxi Regional Academy of Social Sciences.

With the completion of the China-ASEAN Free Trade Area in January 2010, more than 90 percent of China and ASEAN products will be entitled to zero-tariff treatment, and this would mean a significant cut in the trade costs and investment growth between the two sides, acknowledged Liu Shusen, head of the regional bureau of commerce in Guangxi.

When the Free Trade Area comes into operation, it is explained, 93 percent of products China is to import from ASEAN nations will be tariff free, thus greatly lower doorsills of market access for the other sides. Furthermore, after the completion of the free trade area, the two sides would be bent on creating a two-way investment mechanism, which is quite free, apparent and fair, so as to provide more business opportunities for enterprises of either side.

As of the end of 2008, ASEAN's actual investment in China reached 52 billion US dollars, accounting for 6.08 percent of total actual overseas investment in China. In 2008, China's foreign direct investment (FDI) in ASEAN nations amounted to 2.18 billion dollars, an increase of 125 percent year-on-year and, with the signing and execution of the China-ASEAN Investment Agreement, the mutual investment and trade between China and ASEAN would surely enter into a new phase of development in their trade relations of cooperation.

Despite an adverse impact of global financial crisis, the Sino-ASEAN trade grew by 14 percent last year, and China and ASEAN have become each other's fourth largest trade partner. The trade volume between China and Pan-Beibu Gulf rim rose to 226.96 billion US dollars, or 98.2 percent of the total trade volume between China and ASEAN.

Amid a surging momentum of ongoing economic integration in the Asian region, it can be foreseeable that the Pan-Beibu Gulf economic cooperation constitutes one of the main sub-regional cooperative projects between China and ASEAN. Consequently, the Nanning-Singapore economic corridor, the cross-border economic cooperation area in Beibu Gulf rim and bonded port areas would also be new bright and hot spots.

By People's Daily Online and contributed by PD reporters Pang Geping and Xie Jianwei