Analysis of Trade Development between China and Association of Southeast Asian Nations
1International Business School, Dalian Nationalities University, Dalian, China
Since 1990s the economic relations between and Association of Southeast Asian Nations (ASEAN) has becoming increasingly close. Especially in 2010, since the China-ASEAN Free Trade Area established, bilateral trade volume has been increasing continually. Currently, ASEAN is China’s largest trading partner among developing countries, and China is ASEAN’s fourth largest trading partner. This paper analyzed the status of China-ASEAN trade development and proposed the countermeasures for improving the development of China-ASEAN trade.
Keywords: China, Association of Southeast Asian Nations, ASEAN, trade
Journal of Behavioural Economics, Finance, Entrepreneurship, Accounting and Transport, 2013 1 (1),
Received August 26, 2013; Revised December 08, 2013; Accepted December 15, 2013Copyright © 2014 Science and Education Publishing. All Rights Reserved.
Cite this article:
- Jialin, Jiang, and Cai Li. "Analysis of Trade Development between China and Association of Southeast Asian Nations." Journal of Behavioural Economics, Finance, Entrepreneurship, Accounting and Transport 1.1 (2013): 15-20.
- Jialin, J. , & Li, C. (2013). Analysis of Trade Development between China and Association of Southeast Asian Nations. Journal of Behavioural Economics, Finance, Entrepreneurship, Accounting and Transport, 1(1), 15-20.
- Jialin, Jiang, and Cai Li. "Analysis of Trade Development between China and Association of Southeast Asian Nations." Journal of Behavioural Economics, Finance, Entrepreneurship, Accounting and Transport 1, no. 1 (2013): 15-20.
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Since the 1990s, the economic relations between China and ASEAN has becoming increasingly close and bilateral trade continues to boom. China-ASEAN Free Trade Area was established in 2010, marking the development of China-ASEAN bilateral trade has taken an important step. Meanwhile, since January 1st of 2010, China has reduced tariffs on more than 93 percent of the traded products to zero for ASEAN countries and promoted the China-ASEAN trade developed rapidly. With the coming of the tenth anniversary of the establishment of China-ASEAN strategic partnership in 2013, there still exist some barriers and shortcomings in trade between China and ASEAN. This paper analyzes the China’s trade volume with ASEAN, the situation of China’s import and export to ASEAN countries, China-ASEAN trade product distribution and proposes the appropriate countermeasures for China-ASEAN trade deficiencies.
2. The Situation of Trade Development between China and Association of Southeast Asian Nations2.1. Merchandise Trade by Scale
In 2011, total value of imports and exports between China and ASEAN was USD 362.854 billion which ranked the first and second place of China’s value of imports and exports with major trade partners. In 2012, China’s total value of imports and exports to ASEAN was USD 400.093 billion. It shows that trade relation between China and ASEAN are getting closer. Until 2012, ASEAN is China’s third largest trading partner in the world and the largest trading partner among developing countries, while China is ASEAN’s fourth largest trading partner. However, in comparison with EU, obviously, China’s trade relations with ASEAN are not as close as with EU.
For export, from 2000 to 2008 China’s value of exports to ASEAN boomed year by year, upped from USD17.341 billion to USD114.142 billion. In 2002, the speed of growing became fast, up 28.3% than the previous year. In 2009, due to the influence of the global financial crisis, total exports crept down to USD106.297 billion. In 2010, China-ASEAN Free Trade Area fully established, China’s trade volume to ASEAN rallied to USD138.207 billion. And China’s export to ASEAN lasted raising sharply from 2010 to 2012, total exports increased to USD204.272 billion in 2012, however the growth rate was crept down year by year. It is obvious that ASEAN is increasingly becoming an important exporter of China. Alpha
For import, the import had the same change trend with export. There was an upward trend of China’s total imports from ASEAN from 2000 to 2008 with increase from USD 22.181 billion to USD 116.974 billion. Especially in 2003, value of imports reached a peak with USD 47.327 billion. In 2004, the growth rate of imports declined, however from 2005 to 2007, the growth rate of imports accelerated year after year. In 2008 imports growth rate began to declined sharply. In 2009 the imports also had a declined trend and fell to USD 106.714 billion with appearance of negative growth of -8.8% among 12 years. Since January 1st of 2010, more than ninety-three percent of products traded between China and ASEAN enjoy zero tariffs, and China’s imports from ASEAN rose sharply to USD 154.569 billion with growth rate of 44.8%. However starting from 2011, the import growth rate decreased gradually, especially in 2012, representing growth rate of only 1.6%.
There was a phenomenon that China had trade deficit with ASEAN’s member countries from 2002 to 2012. The trade deficit increased year by year from 2000 to 2006, however the trade deficit quickly went down to USD 0.417 billion in 2009 and rallied from 2010 to 2011.
On the export side in 2012, China’s total exports to the six countries of Singapore, Malaysia, Indonesia, Vietnam, Thailand and Philippines amounted to USD 193.701 billion, accounting for 94.82% of total export volume. There was a big increase compared with 2011, especially China’s exports to Malaysia, upped 31% over the previous year. In contrast, China’s total exports to Myanmar, Cambodia, Brunei and Laos was less, therein China’s exports to Brunei and Laos, accounting respectively for less than 1%. But compared with 2011, the exports to Brunei and Laos upped 68.2% and 96.8% over the previous year, showing significant growth. Although the volume of exports is low, the economic cooperation is becoming increasingly close between Brunei, Laos and other agriculture-based nations. China’s export trade to ASEAN is not only limited to old member states, Vietnam is the country joined ASEAN later, but in 2012, the total exports to Vietnam was USD 34.21 billion, upped 17.6% over the previous year, accounting for 16.75% of the total exports China to ASEAN, exceeding Thailand and Philippines ranked in fourth place. In 2012 the growth rate of China’s export to Laos ranked in first among the ten countries, due to Laos holding the ninth Asia Europe Meeting, China CAMC Engineering Corp., LTD., China State Construction Engineering Corp. LTD. and other Chinese companies specifically provided a lot of projects contracts to guarantee the smooth conduct of the summit, these were the main reason for the rapid growth of the trade between China and Laos.
For the 2012 China’s imports from ASEAN was lower than exports. Import trade with Malaysia, Thailand, Myanmar, Laos, Brunei showed negative growth. Trade between China and Singapore, Malaysia, Indonesia, Vietnam, Thailand and Philippines accounted for 71.65% of China’s total imports from ASEAN. By contrast, imports from Myanmar, Laos, Brunei, Cambodia, and Shikoku were lower than other six countries, accounting for 1.35%.
China’s imports and exports to ASEAN mainly concentrate on the six countries of Singapore, Malaysia, Indonesia, Thailand, Philippines and Vietnam, therefore China should strengthen the economic cooperation with the six countries to ensure the trade development between China and ASEAN.2.3. Merchandise Trade by Product
In 2012, Malaysia, Thailand, Singapore and Indonesia are top four trading countries to China among ten ASEAN countries. From Table 4 to Table 7 show the composition of the top ten commodities that the four countries of Malaysia, Thailand, Singapore and Indonesia imported and exported to China in 2012. On the export side, among the commodities that the four countries exported to China, of which the similar are mechanical and electrical products, plastic and rubber, minerals, chemical products, base metals and products, and they were mainly agricultural products and materials products. Especially mechanical and electrical products, accounted for a large proportion of the commodities that four countries exported to China, ranked first among the commodities Malaysia and Singapore exported to China, and the second place of Thailand and the seventh place of Indonesia. China’s great demand for minerals indicated that with rapid economic development the demand for resource products is increasing.
For import, the four countries have the very similar commodity structure of imports from China, the top ten commodities are mainly mechanical and electrical products, chemical products, transport equipment, plastic and rubber, textiles and raw materials, furniture, toys and miscellaneous manufactured articles. In addition, the mechanical and electrical products, plastic and rubber, chemical products also occupied a very important position. By mechanical and electrical products as representatives of high-tech products, high-tech products accounted for a large proportion of these commodities that the four countries exported to China. However the labor-intensive products also accounted for a certain proportion. Malaysia, Thailand, Singapore imported optical, watches and medical devices from China, indicating there is an increasing demand for these emerging trade products, and the emerging trade products have very potential market prospects. Although Singapore is a developed country, still has the similar import and export commodity structure with other three countries. China and ASEAN should continue to strengthen the development of high-tech products and constantly improve the export structure to get mutual benefits. Manufactured products trade accounted for a larger share of trade between China and ASEAN countries, mainly in the food and beverages and tobacco industry, textile industry, machinery and transport equipment and chemical industry.
Due to the lower level of economy development of the six countries, their imports and exports to China mainly focus on agricultural products. Agricultural products trade between ASEAN and China has developed rapidly. These countries are in great demand for industrial products. Their import products from China are mainly electronics, refined oil, steel, textiles, etc.
In 2010 China's utilization of FDI amounted to USD 105.73235 billion of which foreign direct investment from ASEAN countries amounted to USD 6.32368 billion, accounting for abut 6.0%. For the total direct investment from ASEAN into China of which Singapore ranked in first with USD 5.4282 billion, accounting for 86%, and Brunei came in second place. In 2011 China's utilization of FDI amounted to USD 116.00985 billion of which FDI from ASEAN amounted to USD 6.64650 billion, accounting for about 5.7%, decreased compared with 2010. Singapore still ranked first with amount of USD 6.09681 billion, FDI from Brunei into China declined and ranked in third place. However, Malaysian’s FDI increased. Except for Brunei, FDI of Philippines, Indonesia, Laos and Vietnam’s to China all had the decline trend. In contrast, both of FDI from Thailand and Myanmar into China increased.
In 2010, China's outward FDI flows into ASEAN countries was USD 4.405 billion, accounting for 9.8% of outward FDI flows into Asia, and outward FDI stock was USD 14.35 billion, accounting for 6.3% of outward FDI stock into Asian region. In 2011, China's investment flows into ASEAN countries amounted to USD 5.905 billion with an increase of 34.1%, accounting for 13% of investment flows in Asia, and outward FDI stock was USD 21.462 billion, accounting for 7.1% of total outward FDI stock in Asia, Until the end of 2011, China has established more than 2,400 FDI enterprises in ASEAN, hired 117500 local employees. Compared with 2010, China's FDI into ASEAN had an upward trend in 2011.
From the perspective of direct investment flows, China's direct investment into Singapore ranked first among other ASEAN countries, and Brunei came in last place. Compared with 2010, China’s outward foreign direct investment flows into Myanmar, Thailand, Vietnam and Malaysia declined in 2011. As for FDI stock, at the end of 2011, Singapore was in first place ASEAN countries, followed by Myanmar and Cambodia, and Brunei was at the bottom in the list.
It can be seen the bilateral foreign direct investment was evolving constantly; Chinese enterprises invested in these countries mainly concentrate in manufacturing, power development, wholesale and retail trade, mining, construction industry and other industries. China should strengthen investment in high-tech industries, while China also needs to maintain development of investing to developing countries, so that to get complementary advantages, optimize their domestic industrial structure and improve the industrial technology and also promote the progress of the host country.
3. Recommended Policies for Improving Trade between China and Association of Southeast Asian Nations3.1. Strengthening the Development of China-ASEAN Free Trade Area
In 2010, the establishment of China - ASEAN Free Trade Area improved China-ASEAN trade to increase substantially, indicating that the formation of the free trade area has brought the opportunities for China - ASEAN trade development. Cooperating with China can help ASEAN get rid of financial difficulties. For China, the economy external dependence is growing, strengthening trade links with ASEAN and strengthening development of China - ASEAN Free Trade Area can help China adapt to economic globalization, enhance the ability to withstand economic risks and expand China’s economic cooperation with Southeast Asia.
From July 2005, China – ASEAN began to implement tariff reduction policy for 7000 products. And since January 1st, 2010, more than ninety-three percent of product that China trade with ASEAN enjoy zero tariffs. These tax policy has brought a lot of effects for China - ASEAN trade, for the short-term effect, it makes the growth of bilateral trade between China and ASEAN. From the view of long-term effect, it not only can make Guangxi and Yunnan provinces that border with ASEAN get the benefits , but also drive the Southwest region of China adjacent to the ASEAN develop, and eventually the effect will extent to the whole country. Therefore China and ASEAN should strengthen the implementation of zero tariff policy to China - ASEAN Free Trade Area to ensure that by 2015 China will implement zero tariff policy to all ten countries of ASEAN.3.2. Optimizing Structure of International Trade of China
China should gradually phase out these backward industries that compete with ASEAN, such as high-polluting industries and resource-based industries, and should improve the cooperation with the different countries and regions according to their resource characteristics, economic structure and technological level. Optimizing the industrial structure will be conducive to China-ASEAN trade. should continue to develop technology-intensive and capital-intensive industries rather than labor-intensive industries. China can make full use of technology advantages and other advantages in intensifying cooperation of the development of biological resources, mineral resources exploration and other areas to upgrade China's relevant industrial structure, and to avoid free-trade zone industrial competitiveness.
The main traded commodities between China and ASEAN are mechanical and electrical products, indicating high-tech products account for a large proportion of China - ASEAN trade. Therefore, both of the two sides should continue to increase the proportion of high-tech and high value-added goods in trade, improve the technological content of export products and increase the introduction of high-tech and capital-intensive products.3.3. Improving the Construction of Investment Environment
China should improve the investment environment to attract foreign investment. Improving investment environment includes the establishment of standardized, efficient and transparent administrative system, the deep concern for the development of foreign companies and improvement of legal system. At the same time, and ASEAN countries should strengthen infrastructure construction to provide convenient conditions for foreign investment. In 2013, China should seize the opportunities for the tenth anniversary of China - ASEAN strategic partnership and take greater efforts to deepen bilateral investment cooperation. Alpha.
Cultural exchanges are conducive to enhancing mutual understanding and friendship between the people of both sides and establishing harmony neighboring relations. Therefore China and ASEAN countries should promote the friendly exchanges in the fields of folk culture, tourism, education. Particularly in education, the colorful youth friendly exchange activities could enable more young people to participate in the regional cooperation.
Currently, ASEAN is China's third largest trading partner, while China is ASEAN's fourth largest trading partner. From 2000 to 2012, China's trade with ASEAN had maintained growth except in 2009 due to the impact of financial crisis. The total volume of trade amounted to USD 400.093 billion in 2012, of which exports reached to USD 204.272 billion, imports amounted to USD 195.821 billion.
There are economic disparities within ASEAN countries, China-ASEAN trade is mainly concentrated in the five old ASEAN member countries and Vietnam. To China the old ASEAN member countries have the similar imports and exports commodity structure, for import, electromechanical products and other high-tech products occupy the main part. The new four ASEAN countries relatively are economically backward, exports to China are mainly agricultural products, imports are mainly machinery and electronic products, refined oil, steel, textiles, etc. In 2010 and 2011 ASEAN foreign direct investment into China amounted to USD 6.32368 billion, and USD 6.6465 billion. Singapore is the leading country of ASEAN. In 2010 and 2011, China's outward FDI flows into ASEAN countries were USD 4.405 billion and USD 5.905 billion, and Singapore came in first place.
In 2013, for the tenth anniversary of China - ASEAN to establish strategic partnership, China should take full advantage of this opportunity to further comprehensively strengthen mutually beneficial cooperation with ASEAN, besides China needs to deepen and expand cooperation with neighboring countries. Practice will continue to prove that China's sustainable development and prosperity will bring the important opportunities to the neighboring countries including the ASEAN and even to the courtiers all over the world.
This research is supported by Sun Bird research project of students of Dalian Nationalities University.
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