The 17th China-the Association of Southeast Asian Nations (ASEAN) Expo has been held in Nanning, Guangxi from November 27 to 30. In his speech at the opening ceremony this year, Chinese President Xi Jinping said that the China-ASEAN Expo and the China-ASEAN Business and Investment Summit are pragmatic platforms for promoting regional economic integration.
The China-ASEAN Expo and the Summit coincided with the 10th anniversary of the establishment of the China-ASEAN Free Trade Area, the China-ASEAN Year of Digital Economy Cooperation, and the official signing of the Regional Comprehensive Economic Partnership (RCEP) between China and ten ASEAN countries. Therefore, the two events are of particular significance.
Since the establishment of the China-ASEAN Free Trade Area 10 years ago, both sides have drastically cut tariffs and removed non-tariff barriers to trade. The policy dividends of the Free Trade Area keep emerging. China and ASEAN have achieved a high level of trade facilitation and investment liberalization, creating one of the most successful Free Trade Areas in the world.
In terms of trade, China-ASEAN bilateral trade volume has more than doubled from $292.8 billion in 2010 to $641.5 billion in 2019. Prior to the establishment of the Free Trade Area, tropical fruits from ASEAN were rarely seen in northern China, but today, large quantities of fresh ASEAN fruits are available in shops there.
In terms of investment, by the end of 2019, two-way investment between China and ASEAN has totaled $223 billion, featuring a significant increase from before the establishment of the Free Trade Area. In terms of the deep connection and integration of industrial and supply chains, many Chinese and ASEAN companies and the products they produce have become inseparable from one another.
For example, ten years ago, there were almost no Chinese cell phone brands in the ASEAN market. But today, Chinese brands such as Huawei are very popular in Southeast Asia and they run many sales outlets there. Meanwhile, many components of Chinese cell phone brands are supplied from ASEAN companies.
On the financial side, the border trade between China and some ASEAN countries used to be settled by privatecurrency exchangeagencies, but today, banks on both sides have set up more business outlets on each other's territory. The signing of the local currency swap agreement between China and ASEAN countries has made cross-border payments easier and facilitated investment and trade settlements. The use of Chinese currency renminbi (RMB) has become more commonplace in Southeast Asia.
This year, as COVID-19 pandemic rages on, economies around the world face increasing downward pressure and a sharp decline in international investment and trade. Nevertheless, the economic and trade cooperation between China and ASEAN countries has grown against the general trend.
In the first three quarters of this year, bilateral trade volume increased by 5 percent, and Chinese investment in ASEAN increased by 76.6 percent, which fully demonstrates the deep integration of the industrial and supply chains between the two sides and the great potential for future cooperation. For the first time in history, China and ASEAN become each other's largest trading partner.
One of the main reasons for this favorable situation is that China and ASEAN are adjacent to each other. Geographic proximity leads to low logistics costs and closer economic and trade cooperation. At a time when the pandemic hinders the global flow of people and logistics, these natural advantages have become more prominent and can serve as a powerful driver of the economic and trade cooperation between the two sides.
Secondly, since the upgraded protocol of the China-ASEAN Free Trade Area came into force last October, the restrictions in the areas of rules of origin, trade clearance, service trade, and investment have all been eased, further unleashing the policy dividends of the free trade area.
Thirdly, China and ASEAN have worked together to overcome the impact of the COVID-19 and find ways to expand economic and trade cooperation. China and ASEAN countries have opened "fast tracks" for people-to-people exchanges and "green lanes" to facilitate the flow of goods, so as to accelerate the resumption of work and production.
Both sides have continued to promote the cooperation over major projects, including Jakarta-Bandung Railway and China-Laos Railway. With industrial and supply chains between both sides becoming more interdependent, China and ASEAN have been committed to removing trade barriers, streamlining the procedures of customs clearance, and facilitating the development of trade across land borders and trade in general.
Fourthly, the two sides have deepened their cooperation in the area of digital economy especially in cross-border e-commerce. For example, many Thai products are sold better on China's e-commerce platforms such as Tmall through the "11.11 Global Shopping Festival" and other promotional events. Some Thai politicians and movie stars often drive sales with live video streaming on China's e-commerce platforms. The new economic cooperation model has greatly boosted the development of trade and investment between the two sides.
Looking to the future, China is pushing for a dual-circulation development pattern, and Southeast Asia will become an important area where the interests of the Belt and Road Initiative and that of the dual-circulation development pattern converge. China and ASEAN should continue to strengthen policy communication and development planning coordination, and promote bilateral investment and trade cooperation.
In the meantime, China and ASEAN should also improve the quality of economic and trade cooperation by creating outstanding collaborative programs in e-commerce, artificial intelligence, smart cities, 5G and other fields, thus promoting the regional and global economic recovery and development.