China Daily Global Edition (USA)
Closer links forged in adversity
China and ASEAN are strengthening their economic and trade ties despite the pandemic
The economic and trade cooperation between China and the members of the Association of Southeast Asian Nations has remained robust despite the novel coronavirus outbreak. Although the COVID-19 pandemic plunged most ASEAN countries into a serious recession in 2020, with ASEAN’s economic output contracting by 3.5 percent, the ASEAN countries have started to show signs of recovery since the second quarter of this year.
In May 2020, China and ASEAN issued the China-ASEAN Economic Ministers’ Joint Statement on Combating the Coronavirus Disease (COVID-19) and Enhancing ASEANChina Free Trade Agreement Cooperation, affirming they agreed to keep their markets open, refrain from imposing restrictive trademeasures, create a favorable environment for trade and investment, and give full play to the important role of the ACFTA in boosting trade and investment amid the pandemic to ensure stable and inclusive regional growth.
In July 2020, the transport ministers from China and ASEAN issued a joint statement, pledging to strengthen cooperation in the field of transport and logistics to ensure the unimpeded cross-border movement of essential goods.
China and the ASEAN countries, such as Singapore, Laos, Myanmar and Indonesia, have established “fast tracks” to facilitate the orderly flow of personnel and “green lanes” for the flow of goods.
The trade and investment cooperation between China and ASEAN has been remarkable in the first half of 2021, with ASEAN continuing to be China’s largest trading partner. The bilateral trade volume hit $410.75 billion, with Chinese exports to the ASEAN countries totaling $225.83 billion, surging 38.3 percent year-on-year and Chinese imports from the ASEAN countries totaling $184.92 billion, surging 38.1 percent year-on-year. The ASEAN countries’ foreign direct investment in China totaled $5.6 billion and China’s FDI in the ASEAN countries totaled $6.5 billion. The total value of Chinese businesses’ newly signed overseas contractual engineering projects in the ASEAN countries was $27.8 billion, with the accomplished business revenue hitting $13.4 billion.
And despite the adverse impact of the COVID-19 pandemic on China-ASEAN infrastructure connectivity, major infrastructure construction projects such as the China-Laos railway, Jakarta-Bandung high-speed railway, BangkokNakhon Ratchasima section of China-Thailand high-speed railway and Malaysian’s East Coast Rail Link are under construction and making new progress.
In November 2020, China and 14 other Asia-Pacific countries formally signed the Regional Comprehensive Economic Partnership. Under the RCEP framework, China and the other 14 RCEP members will further reduce tariff and non-tariff barriers, promote trade and investment liberalization and facilitation, advance further opening-up of the regional market and form more open, free and transparent economic and trading rules for the trading bloc, injecting new vitality into China-ASEAN economic and trade cooperation. In the post-pandemic era, China and the ASEAN countries should further strengthen political mutual trust and gradually build the micro-foundations for a new type of China-ASEAN economic and trade cooperation.
To start with, China and ASEAN need to stand in solidarity against the COVID-19 pandemic and facilitate an early and full recovery of the regional economy.
The ASEAN countries are still grappling with the COVID-19 pandemic and experiencing vaccine supply shortages. China should join hands with the ASEAN countries in the fight against the pandemic and in promoting economic recovery based on the five strategic areas and priorities stated in the ASEAN Comprehensive Recovery Framework. China and the ASEAN countries should select priority cooperation areas for promoting a comprehensive recovery. Based on the different COVID-19 prevention and control needs of the ASEAN countries, China could provide vaccines to the countries in need and strengthen cooperation in such areas as vaccine research and development, production and purchase, and support the construction of an ASEAN reserve warehouse for emergency medical supplies. The two sides should accelerate the formulation of the Action Plan for Digital Economy Cooperation to boost cooperation in e-commerce, digital infrastructure, and the digital transformation of micro, small and medium-sized enterprises; advance blue economy cooperation by boosting maritime cooperation and gradually establish a blue economy partnership; jointly promote lowcarbon economic transformation and scale up green infrastructure projects to usher in a green recovery in the post-pandemic era.
Second, the two sides should boost their pragmatic cooperation in production capacity based on “what the ASEAN countries need and what China excels at” to achieve industrial complementarity and mutually beneficial cooperation. Against the backdrop of the global value chain restructuring, the two sides need to establish a regional value chain led by Chinese and ASEAN businesses that incorporates local businesses into the regional supply chains. They should also build closer ties between Chinese and ASEAN businesses, so as to promote cooperation on the development of a high-quality Belt and Road.
Finally, the two sides should seize the opportunity of the RCEP to accelerate and elevate China-ASEAN regional economic integration.
The RCEP agreement has integrated four “10+1” free trade agreements and the bilateral free trade partnerships of the RCEP members. The high-standard free trade pact will replace the original free trade rules of signatory countries and form a unified economic and trading rule system for the RCEP trading bloc, effectively solving the fragmentation problem facing regional economic integration. To date, the ASEAN countries’ combined trade volume with other members of the RCEP accounts for more than half of the total and FDI from other RCEP countries in ASEAN has accounted for over 40 percent of the total FDI inflows into ASEAN. China is also ASEAN’s largest trading partner and an important source of FDI inflows into the ASEAN countries. Following the signing of the RCEP pact, China should carefully study the new zero-tariff items and service trade opening-up sectors of ASEAN and explore ASEAN’s diversified market in a planned and well-directed manner and make good use of the RCEP cumulative rules of origin to encourage businesses to participate in the regional value chains, industrial chains and supply chains.