Friday, October 11, 2013, 08:43
China playing a rising role in ASEAN business

Being export and investment-oriented, the Association of Southeast Asian Nations economies have benefited from the Chinese market, which has fostered the bloc’s rising momentum in both of its economic growth drivers, experts said.

ASEAN member countries, including Malaysia, Singapore and Thailand, are considered to be the world’s most burgeoning economies at a time of global economic fluctuation. It started a new era of its cooperation with China in 2010, when the China-ASEAN free trade zone was launched.

The free trade association, benefiting a population of 1.9 billion and with a GDP of nearly $6 trillion, also signals China’s new steps toward the bilateral coordination mechanism. The two sides plan to increase bilateral trade to $1 trillion by 2020.

Zhang Hemin, a Malaysian- Chinese, came to Nanning, the capital city of Guangxi Zhuang autonomous region, during China’s National Day holiday to sell rubber products.

“Because China’s domestic demand is booming, we expect to set a foothold in the huge market and, more importantly, to gain from China’s efforts to promote trade with ASEAN trading partners,” Zhang said.

From $55 billion in 2002, bilateral trade between China and ASEAN increased to $400 billion in 2012. Over the past decade Sino-ASEAN trade has jumped more than 600 percent.

Malaysia has been China’s largest trading partner among ASEAN members since 2009. China has overtaken Singapore to become Malaysia’s largest export market.

Rubber is one of the main exports from Malaysia to China. While, Zhang’s company is only one of thousands from ASEAN member countries tapping into the Chinese market and exporting various goods ranging from agricultural, electronic to textiles.

China’s ongoing structural transformation and upgrading is not only being conducted as a key way to maintain sustainable economic growth but also to act as a big attraction to foreign trading partners.

“Since the global financial crisis, ASEAN economies have suffered a slowdown. But the Chinese market has fueled and helped drive the economic growth of the community,” said Mei Xinyu, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation.

“China has already become a stabilizer of the economic development of ASEAN members,” Mei added.

Former ASEAN Secretary-General Surin Pitsuwan said China is such a huge market that everyone wants to enter it so ASEAN economies will grow alongside China.

“We should also get involved in China’s supply and production lines,” he said.

At the opening ceremony of the 10th China-ASEAN Expo in September, Premier Li Keqiang vowed to further reduce tariffs, initiate service trade negotiations and ease market access in the investment area as main measures to upgrade the Sino-ASEAN Free Trade Association.

The China-ASEAN FTA is the world’s third-largest. Since it was launched, bilateral economic cooperation has become a model for international trade exchange globally. The growing convergence of southeast Asian economies has become a real attraction for foreign investors to enter the emerging economy.

Li also said China would like to reach a long-term agreement on agriculture trade with ASEAN and actively increase imports of competitive products from the association.

Apart from that, the government also plans to promote bilateral investment to $150 billion within the next eight years.

The China-ASEAN FTA brings benefits in terms of both trade and investment, according to Pitsuwan.

By the end of 2012, accumulated bilateral investment between China and ASEAN  reached $100.7 billion, of which investment from China accounted for 23.4 percent and that from ASEAN was 76.6 percent, according to the China-ASEAN Business Council.

In 2012, China’s investment in ASEAN economies was $4.42 billion, up 52 percent from a year earlier. Bilateral investment was valued at $11.49 billion, of which Chinese investment accounted for 38.5 percent.

“China’s investment in ASEAN economies witnessed a faster-pace of growth than ASEAN’s investment in China last year. The proportion in total has been rising in recent years,” said Xu Ningning, executive secretary-general of the business council.

By the end of 2012, Singapore had become the destination where Chinese companies invested most among ASEAN members, followed by Cambodia, Burma, Indonesia and Laos, according to data from the business council.

“Thanks to China’s good economic momentum, competitive Chinese enterprises have actively invested in developed and emerging economies, driving global economic development. Many Chinese companies have expanded their businesses in Singapore,” said Tan Lui Hai, economic counselor at the Singapore Embassy in China.

Tan said China is the center of Asia and Singapore would like to be a gateway for Chinese investors’ global expansion.

Ong Chong Yi, minister counselor for economic affairs at the Malaysian embassy in China, said that over the past three years Chinese investors have been active in the construction sector in Malaysia but have less presence in the service sector.

“The liberalization of the country’s service sector gives Chinese companies opportunities to explore new areas of business,” Ong said.

“Factors including strong complementary trade, broad market access and rich reserves of natural resources in ASEAN economies have boosted Chinese investment flowing to them in recent years,” said Xu at the business council.