ASEAN-China Trade and Investment Ties Strengthen
Analysts note that China is entering a new chapter in its economic development in which it will no longer have the need to rely on its export capabilities for its growth and prosperity, but will focus on its domestic consumer and services market. This new direction puts China in line for becoming one of the biggest trade and investment localities for the ten countries of ASEAN (Association of South East Asian Nations), which are Indonesia, Malaysia, Singapore, Thailand, the Philippines, Brunei, Myanmar, Cambodia, Laos and Vietnam.
Home to more than 600 million people, ASEAN has a combined GDP of US$2.1 trillion, with a rapidly developing domestic consumer market. It is anticipated that the formation of the ASEAN Economic Community (AEC) by the year 2015 will continue to bolster the region’s value as a trade partner, both with China and in other parts of the world. The stated main objectives of the AEC are to create: a single market and production base; a highly competitive economic region; a region of equitable economic development; a region that is fully integrated into the global economy. Already ASEAN countries have been lowering their import duties with a target of zero for certain categories by 2015.
With the development of both China and ASEAN, the trade relationship between the two parties has become increasingly reciprocal. The increase of middle-class families in China, along with the rapid rate of urbanization, changes in lifestyles and consumer buying habits, continues to open up a significant consumer market for ASEAN, while ASEAN provides Chinese companies with low-cost production locations due to the availability of large labor pools and competitive production conditions, which is particularly true of the Philippines, Indonesia, Vietnam and Cambodia.
Last year trade between ASEAN and China experienced a ten percent increase, to $400 billion, and it is widely expected that this annual bilateral trade volume will reach $1 trillion by the year 2020, with bilateral investment growing to $150 billion by then. Malaysia, Thailand and Singapore are the leading countries of ASEAN, as is evident by the fact that two-way trade between China and Malaysia reached an all-time high of $94.8 billion last year. Clearly, there is plenty of potential for closer trade and investment ties between ASEAN and China.