On August 7, a meeting of the RCEP Trade Negotiation Committee was held by video. All parties, including China and ASEAN, reaffirmed their consensus to sign the agreement as scheduled in 2020, and made efforts to resolve the remaining issues in accordance with the instructions of the RCEP Ministerial Meeting on June 23, 2020.
Beyond expectation, within reason
China and ASEAN have long cooperated in trade. So far, China has been ASEAN's largest commodity exporter for 11 consecutive years and ASEAN's largest commodity importer for 10 consecutive years. In 2019, ASEAN surpassed the United States and became China's second largest commodity trading partner for the first time.
The move to become China's largest trading partner was "unexpected," according to Xu Liping, mainly because of the epidemic. “Compared with the European Union, ASEAN still has a gap in economic size.”he said. At the same time, the epidemic has hit the global industrial chain and supply chain that are too small and too long. For Europe, which is relatively far away from China, the impact is obviously greater than that of ASEAN. Therefore, based on the existing trade stock between China and ASEAN, this result is formed.
Sang Baichuan, dean of The Institute of International Economics, University of International Business and Economics argues that this results in a "reasonable", "the association of south-east Asian nations (ASEAN) is China's second largest trading partner last year, with China's import and export volume of 4.43 trillion yuan, with China's largest trade partner of the European Union (RMB 4.86 trillion) is not large, the gap between China's import trade growth for the association of south-east Asian nations (ASEAN) also faster than growth of the European Union." He told China Report that the main reason is that the industrial trade cooperation between China and ASEAN is very smooth.
Smoothness first manifests itself in the system arrangement, the Association of Southeast Asian Nations (ASEAN) in 2010 built Free Trade Area with China, in 2019, China-ASEAN Free Trade Area agreement upgraded. ASEAN, China, Japan, Korea, Australia, and New Zealand jointly concluded the RCEP text negotiations in November 2019.
The second reason is that the industrial structure between China and ASEAN is highly complementary. Sang Baichuan said that China is in a leading position in the process of industrialization and ASEAN countries are developing rapidly even though their industrialization level is lower than China's. Therefore, there are still many opportunities for industrial cooperation between the two sides and there are great complementarities in tradable products.
Long-term stability of momentum
"If the epidemic becomes normal, I think it will remain so for a while. If it returns to normal, it will take some time for ASEAN to continue to be China's largest trading partner." Xu Liping told China Report that there is still room for exploration between China and ASEAN.
Sang Baichuan is more optimistic that the relationship between China and ASEAN, the two largest trading partners, will remain and strengthen for a long time to come. In the face of huge economic interests, both sides are smooth in terms of policy communication, infrastructure connectivity, economic and trade system docking, as well as financial integration and cultural exchanges, so the trade relationship will be relatively stable and develop rapidly.In addition, China and ASEAN are highly complementary in industrial structure and traded products. Even after the end of the epidemic, the two sides will maintain closer cooperation and trade relations will make great progress.
Mutual benefit and win-win results for all parties
The increasingly close trade and investment between China and ASEAN is undoubtedly mutually beneficial for both sides.
From China's point of view, Xu Liping believes that ASEAN is an important object of neighborhood diplomacy. If cooperation in the field of economy and trade can maintain good relations, China will make orderly progress in connectivity and "One Belt and One Road" construction in the future, making the China-ASEAN region the most dynamic place in the world. According to Sang Baichuan, on the one hand, The iron ore, natural gas and agricultural products imported by China from ASEAN can meet the huge domestic market demand. On the other hand, China's external supply chain has been challenged by the epidemic and trade frictions, so strengthening economic and trade relations with ASEAN is also an important option to further diversify risks and promote market diversification.
From the perspective of ASEAN, Sang Baichuan said that the deepening of Trade relations between China and ASEAN can further promote the industrialization level of ASEAN and also help improve the level of social welfare of ASEAN countries, so this is an irreversible relationship.
"To promote investment and trade between China and ASEAN is not only beneficial to China, but also beneficial to the region and the world economy." Xu Liping added that ASEAN's emergence as China's largest trading partnership has, to some extent, complied with the eastward movement of the global industrial and supply chains, helping to redefine the regional industrial and supply chains and promoting the further growth of the world economy.
Bridging risks and broadening cooperation
Sang Baichuan believes that the most important risk to be avoided in the process of cooperation is geopolitical instability. Some influence on the penetration of the Association of Southeast Asian Nations (ASEAN), it may affect the ASEAN countries and China's economic relations, shake the stability of both sides, so special to strengthen political mutual trust between China and ASEAN, "China's geopolitical no demands, no ambition, we hope that peace and harmony with surrounding countries, achieve mutual benefit and win-win results."
"As I mentioned earlier, China is seeking transformation and upgrading of economic structure, and high-end manufacturing and modern service industry develops rapidly, and the ASEAN countries to the Chinese industry and a lot of energy, mineral resources, and other products exports to China, also makes China to ASEAN investment increases quickly, which means that the two are consistent in the industrialization process." According to Sang Baichuan's analysis, China has a leading edge in technology, talent and management, which will play an increasingly important role in driving ASEAN's economic development. Therefore, in the future, both sides can strengthen all-round cooperation in technology, industrial chain, supply chain and service fields, which has great potential.
"At present, ASEAN is also optimizing the overall investment environment. Many enterprises have placed their r&d centers and management centers in mainland China and shifted their production bases to ASEAN. This is the direction that should be pushed forward in the future." Sang told China Report.
Xu Liping believes that the future cooperation between the two sides in the field of digital economy is also very big, "the outbreak of the epidemic has challenged the traditional trade model, cross-border e-commerce, cloud conference and other digital economy-related industries may be very good growth points, the two sides also have a lot of room for growth.
In addition, if the epidemic ends, the development of tourism may also give a big boost to the economic development of both sides. "Although the added value of tourism may not be so high, it will drive the development of various factor industries." In short, Cooperation between China and ASEAN will have a broader prospect, Xu said.
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