China-ASEAN free trade area starts operation

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China and the Association of Southeast Asian Nations (ASEAN) kicked off the world's largest free trade area (FTA) embracing developing countries Friday as businessmen and trucks loaded with vegetables and fruits thronged border markets.

Dozens of trucks, mostly carrying dragonfruit from Vietnam, were waiting to be unloaded Friday morning at the Tianyuan Fruit Trade Market, one of China's largest market for fruit import, at the Pingxiang Port in Guangxi Zhuang autonomous region.

"The establishment of the free trade area is really good news for me," said Liu Yuzhen, who has been trading fruits for 16 years.

She now sells more than 10 tons of apples, pears, oranges and other fruits to southeast Asia every day, and hopes her business will expand as the FTA will facilitate the customs clearance and reduce the logistics cost.

The China-ASEAN FTA covers a population of one billion and involves about $450 million of trade volume.
The average tariff on goods from the ASEAN countries is cut down to 0.1 percent from 9.8 percent. The six original ASEAN members, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, will slash the average tariff on Chinese goods from 12.8 percent to 0.6 percent.

By 2015, the policy of zero-tariff rate for 90 percent of traded goods is expected to extend between China and four new ASEAN members, Cambodia, Laos, Myanmar and Vietnam.

"China's efforts to establish the FTA aim not only at expanding overseas markets, but also promoting trade and investment liberalization, especially amid the global trade protectionism," said Zhang Monan, an economist with the State Information Center.
China and ASEAN members could cooperate in wider fields, from natural resources to high technologies, she said. "The further economic integration between the two sides could be very competitive in the global economy."

The FTA would also facilitate more cross-border yuan trade settlements and currency swap agreements between China and ASEAN members, she said.

The cooperation will help ASEAN members become less dependent on the US dollar, which has become highly volatile as a result of the global financial crisis, she said.

Vice Commerce Minister Gao Hucheng said earlier the establishment of the FTA will promote the regional economic integration, benefiting companies and consumers.

China and the ASEAN launched their cooperation dialogue in 1991 and signed the China-ASEAN Framework Agreement on Comprehensive Cooperation in 2002.

 

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2009-Dec-30 07:31:07
A comprehensive trade pact between China and major Southeast Asian economies that comes into effect on Friday is expected to accelerate bilateral commerce and cut reliance on developed economies hit by weak import demand, key officials from both sides said yesterday in Beijing.
Trade volume in the China-ASEAN Free Trade Area (FTA) "will jump," and the yearly rate of growth will be "40 to 50 percent or more for a certain period of time," a Thai embassy official said during a press conference held by the Ministry of Commerce (MOFCOM).
Warawudh Chuwiruch's assessment was largely shared by Chinese officials at the conference.
"After 2010, bilateral trade will see rapid growth despite the financial crisis," said Zhang Kening, commercial counselor at the department of international trade & economic affairs under MOFCOM. But, "in the short-term, it is impossible to achieve that (kind of) robust growth," Zhang cautioned.
The China-ASEAN FTA, which is operational from Jan 1, 2010, will be the largest of its kind, covering a population of 1.9 billion. It will encompass a region with the "largest GDP worth $2 trillion" annually, Chuwiruch said.
China-ASEAN trade has outperformed commercial exchanges with other trade partners despite the global downturn.
From January to November, China-ASEAN trade dropped by 13.2 percent from a year earlier, 4.3 percent less than the 17.5-percent decline seen in China's overall trade volume during the same period.
Ever since 2002, when China and the ASEAN signed the Economic Co-operation Framework agreement that signaled a start to the China-ASEAN FTA, bilateral trade has grown by 24.2 percent annually until 2008 when the global financial crisis hit.
More competition
Under the FTA framework, China and six ASEAN nations - Brunei, the Philippines, Indonesia, Malaysia, Thailand and Singapore - will cut to zero the tariff on 90 percent of imported goods, or 7,000 product categories.
The other four ASEAN members will follow suit from 2015. "Industries in China and ASEAN complement each other. China imports resource-related products such as copper and rubber, and exports ships, steel, garments and ceramics," Zhang said.
There is significant concern, however, on both sides.
Even though more products will be imported at lower rates, the agreement will spark "fiercer competition in select industries", such as garments, furniture, footwear and automobiles, the Thai embassy's Chuwiruch said.
"Chinese manufacturers are good at cost control. The market share they (enterprises from ASEAN) now have will probably be eroded by powerful Chinese competitors. They will be phased out if they fail to become competitive quickly," he said.
In fact, some Indonesian enterprises have urged the government to delay the FTA's implementation, said Xu Ningning, deputy secretary-general, Chinese secretariat, at the China-ASEAN Business Council.
"Industry associations from Indonesia are strongly against the FTA, claiming it will push up the unemployment rate. They are suggesting that the government postpone implementation for another three to five years," said Xu.

 

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NANNING: China had attracted $52 billion of investment over the past 30 years from the member states of the Association of Southeast Asian Nations (ASEAN), said an official with the China-ASEAN Business Council Wednesday.

As of the end of 2008, the bilateral investment reached $60 billion, of which the ASEAN investment in China was 52 billion, taking six percent of world's total investment in China, the official said.

The top five investors in China were Singapore, Malaysia, Indonesia, Thailand and the Philippines in 2008, of which Singapore had become the world's third largest investor in China, the official said.
The bilateral investment is obviously unbalanced, reasons are that ASEAN countries eye China as a huge market while Chinese companies lack experience in ASEAN, and that they already have China as a huge market, the official said.

Statistics from the China customs show that the trade volume between China and ASEAN reached $231 billion in 2008, with an annual increase rate of 21.6 percent since 2004.