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Print Edition> World
UPDATED: January 23, 2011 NO. 4 JANUARY 27, 2011
FTA Driving Asian Growth
The fledgling China-ASEAN free trade area has proved its worth in the region
By DING YING
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LOWER PRICES: A woman buys imported Southeast Asian fruits in Nanning, capital of Guangxi Zhuang Autonomous Region, on January 1, 2011 (ZHOU HUA)

In the meantime, travelling to ASEAN nations has become more popular in China. Guangxi's official statistics showed some 3 million people entered Viet Nam through Guangxi from January to November 2010.

China and ASEAN can share natural and human resources in the CAFTA to make their industries more competitive, while jointly exploring regional and international markets, said ASEAN Secretary General Surin Pitsuwan.

As a business platform, the CAFTA can also attract outside economies to exploit business opportunities in the region along with CAFTA members, he told the Xinhua News Agency.

Further potential

Xu said the CAFTA has delivered benefits to both China and ASEAN nations and will greatly promote free trade in Southeast Asia and worldwide.

If China and ASEAN continue to open markets, improve investment climate and lower investment barriers, they will enjoy greater growth potential, he said.

As the United States and some European countries establish trade barriers for Chinese products, greater numbers of Chinese enterprises will invest in ASEAN nations in order to have access to foreign markets like Japan, South Korea, Europe and the United States.

Some enterprises outside the CAFTA will also invest in ASEAN nations in an attempt to explore the Chinese market, Xu said.

However, experts say there are still more questions, such as unbalanced trade and logistics, to be answered before the CAFTA can reach its full potential.

Although China ran a trade deficit with ASEAN in 2010, its trade with specific nations, such as Brunei, Viet Nam and Indonesia, still saw a surplus.

Wang Yuzhu, an ASEAN studies expert with the Chinese Academy of Social Sciences (CASS), said the two sides still face the challenge of further decreasing trade barriers to reach a new trade balance, by taking into account their different development levels.

The logistics system in the CAFTA also handicaps its development. Due to differing transportation conditions and standards, the logistical cost in the CAFTA has remained high. This is a major obstacle to further trade and economic cooperation in the region and both sides have realized the urgency of solving this problem.

Chinese and ASEAN foreign ministers are scheduled to meet in late January in Kunming, capital of southwest China's Yunnan Province, for one of a series of events commemorating 20 years of dialogue between China and ASEAN.

The foreign ministers will also inspect the Kunming-Bangkok highway. The 1,800-km road—linking Kunming with Thailand's Bangkok—was completed in 2008 and cut the travel time from Kunming to Bangkok in half, to about 20 hours.

China has also decided to spend billions of dollars on a high-speed railway to Singapore. The railway will promote economic cooperation in the CAFTA as well.

Another challenge is that although China and ASEAN nations signed a series of cooperation documents, it will take time for both sides to implement these documents. Besides, the practical effect of these documents might not be immediately obvious.

Wang Yuzhu said the CAFTA has had three major effects: Economic dependence has increased, mechanisms for trade and investment have further developed and economic cooperation has helped to bolster political trust.

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