ACFTA - Big Opportunities for ASEAN and China

ACFTA officially took effect in January 2010. With its commitment, tariffs on 97 % of common commodities traded between ASEAN 6 countries (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) and China are scrapped. Other signatories to the ACFTA are also effectuating tax cuts according to the timelines agreed. With many trade barriers lifted, ACFTA has paved the way for boosting the bilateral trade between ASEAN and China. If the two-way trade turnover between ASEAN and China reduced from US$196.9 billion in 2008 to US$178.2 billion in 2009 (down 9.5 %), remarkable progress in the bilateral trade has been seen after the enactment of the agreement in 2010. According to the Chinese General Administration of Customs (GAC), the two-way trade turnover between China and ASEAN topped US$136.5 billion in the first six months of 2010, up 55 % from a year earlier. Particularly, China exported US$64.6 billion worth of goods to ASEAN countries in the period, up 45 % year on year, while ASEAN countries spent US$71.9 billion on imports from China, up 64 %. As a result, ASEAN outstripped Japan to become the third largest trade partner of China.

 

Mr Liu Jianwen, Deputy Director of the Southeast Asia Studies Institution under Guangxi Academy of Social Sciences, said: The recent economic crisis caused FDI flows from China to ASEAN to drop significantly but this did not negate the attractiveness of ASEAN to Chinese investors, given a global investment flows declined more than 37 % last year. In 2010, the two-way trade turnover between China and ASEAN expanded drastically. Apart from benefiting from the post-crisis global trade growth recovery, the two sides also benefit from the ACFTA zero tariff policy as it encourages importers and exporters to accelerate their activities more than ever.

 

Huang Mengfu, Vice Chairman of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), said: The successful building of the free trade area by China and ASEAN is an activity reflecting nonstop developing bilateral ties and reaffirming a prosperous strategic partnership between the two sides. In recent years, the bilateral cooperation has been constantly promoted. Political exchanges and high-level dialogues have incessantly strengthened. Besides, the economic cooperation has been continually uplifted, bringing up trade relations. China and ASEAN are important markets and partners of each other. In addition, the two-side cultural and tourism exchange and cooperation development are increasingly vibrant. ASEAN has become an attractive destination for Chinese tourists.

Seeing huge benefits that ACFTA brings in, ASEAN leaders have confirmed to continue to promote the China - ASEAN free trade area in the coming time. Chinese Commerce Minister Chen Deming said China is considering supporting ASEAN companies with disadvantageous positions, helping the ASEAN countries to improve infrastructures and commodity circulation systems to strengthen their competitiveness in international trade. In addition, ACFTA’s long-term task is to reduce the overwhelming proportion of cross-border trade. This target is within reach if ASEAN business communities are well informed of ACFTA. Businesses need full and detailed instructions for the implementation of ACFTA.

 

According to Mr Chen Deming, at the consultative meeting between ASEAN Economic Ministers with Chinese and Japanese counterparts on August 26, China proposed holding yuan-based trans-border trade payment conferences in Beijing, Shanghai and Yunnan (China) in November 2010 in a bid to boost up economic and trade cooperation between China and ASEAN, and this proposal received appreciations and enthusiastic supports from economic ministers of ASEAN member countries. In the context that China and ASEAN member countries are working to inflate bilateral trade turnover, these conferences will be important forums for senior government officials and specialists from ASEAN member states to discuss and exchange views on how to develop and promote the two-sided economy and trade.