Rising Powers Workshop 1 Beijing, 15-16 July 2010 China ASEAN Relations: Opportunities and Challenges for Development Prof. Dr. Dang Nguyen Anh Vietnam Academy of Social Sciences (VASS)
ASEAN The Association of Southeast Asian Nations - Founded in August 1967 10 countries / 10 economies in Southeast Asia Higher income group: (Brunei, Singapore, Indonesia, Malaysia, Thailand, the Philippines) Lower income group: (Cambodia, Laos, Myanmar, Vietnam) Vietnam joined the Association in1995 is currently the ASEAN President 2
I. Global Economic Restructure 1. Balanced growth Reducing global imbalances Less Export-oriented & more Domestic Demand-driven growth 2. Green growth New environment-friendly Technologies Low-Carbon growth/economy 7/21/2010 Dang Anh - VASS 3
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ASEAN (cont.) A combined population of around 600 million, with a combined GDP of $750 billion and total trade of US$720 billion annually in ASEAN Many of the ASEAN members have undergone massive economic growth and development over the past few decades Though very diverse, many of the Southeast Asian countries share some similarities in culture, geography, and colonial legacies Expanding external links (ASEAN+1, ASEAN+3, ASEAN+5, ASEAN + 8) 5
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ASEAN (cont.) ASEAN is committed to narrowing the development gaps and to advance integration through building an ASEAN Community to further peace, progress and prosperity of its peoples. The 55-article ASEAN Charter serves as a legal and institutional framework to meet future challenges and opportunities. 7
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Why China - ASEAN? Expanding market opportunities for China s business (the go abroad strategy) Under the framework of regionalism, easier to start with China and ASEAN have reached a new era where the two sides have established an economic, legal and political framework for their comprehensive cooperation. FDI and exports have played a very important role to support the Chinese economy. 9
China - ASEAN Cooperation Development in three main stages: 1991-1996: Initial contact and set up the common framework for dialogue 1997-2002: Friendly and reliable neighbors in the Southeast Asian region 2003 - present: Strategic partnership and comprehensive cooperation (China accession to WTO) 10
Signed CAFTA ASEAN and China completed signing of the free trade agreement in July 2005. The CAFTA agreement is comprehensive in scope, including free trade in goods, trade in services, investment, and economic cooperation. The CAFTA would strengthen the economic ties between ASEAN and China and would create a larger and more efficient market with greater opportunities in this region. 11
China ASEAN Business Total ASEAN exports to China increased from US$ 60 billion in 2003 to US$ 192 billion in 2007 and US$ 225 billion in 2008 ASEAN imports from China continued to accelerate with a 19% growth in 2008, from 15.7% in 2007 (total ASEAN imports from China at US$ 254 billion). China becomes the third largest trader with ASEAN (by passing the US and just after Japan and EU) 12
China-ASEAN booming trade 13
CAFTA (cont.) Effectively started from Jan 2010: No duties on goods and tariff-rate cut in trading between China and ASEAN for over 93% of the commodity items. Brunei, Indonesia, Malaysia, Thailand, and the Philippines implement the CAFTA since 2010, while the other members (Cambodia, Laos, Myanmar, Viet Nam) since 2015, respectively 14
Increased exports Source: ASEAN, 2010. 15
Opportunities A dynamic model of South-South cooperation CAFTA largely benefits China and ASEAN as a huge market (2 billions of consumers; GDP = $US 2000 billions) - e.g. Hong Kong benefits most in investment and trading with ASEAN Booming the export /import markets (from fruits, foods to cements, oils, automobiles, computers with low/no tariff between China and ASEAN. Strengthening regional and int l integration 16
Prospects FTA is just one core part. It also leads to other areas for broad cooperation. Priority sectors for further cooperation: agriculture; IT, human resources; investment; banking, finance, tourism transport, energy, subregional development and non-traditional security. Both China and ASEAN realize the significance of economic interests and political relations 17
Challenges Different and diverse political systems within ASEAN (Indonesia, Myanmar, Thai, Vietnam Development gaps within ASEAN (Singapore, Brunei vs. Laos, Cambodia) Most ASEAN economies are small and relatively less developed, poverty remains Not every ASEAN member well prepared for free trade and investment 18
Challenges (cont.) China s high economic growth have created challenge to ASEAN since China becomes more competitive and attractive. CAFTA: Duplicated and overlapped in occupation structure, farming products which creates harsh competition Shifting polluted low-tech manufacture and lowskilled labor to LICs Rising powers: China s territorial dispute and increased conflicts with regional neighbors 19
Concluding Remarks [1] China-ASEAN initiative will facilitate international integration and development. Very bright future for trading, services and investment between China and ASEAN FTA would benefit consumers and increases competiveness in the long run The best strategy is to pursue globalism through more comprehensive regionalism 20
Concluding Remarks [2] FTA is important but not just FTA, close partnership, compromise and shared benefit Need to move towards a more balanced and green growth model for sustainability Development not only requires economic growth but also constructive dialogue, mutual trust and good will. 21
THANK YOU 22