China-ASEAN Trade Sees Strong Growth in First Half of 2014
SHANGHAI – Trade between China and the ASEAN nations reached US$220.69 billion in the first half of 2014, an increase of 4.8 percent compared with the same period last year, China’s Ministry of Commerce (MOFCOM) announced this week.
China and ASEAN have an important economic relationship – China is ASEAN’s largest trading partner and ASEAN is China’s third-largest trading partner. According to the China Council for the Promotion of International Trade, ASEAN will become China’s largest trading partner by 2015.
China-ASEAN bilateral trade has boomed in recent years, growing five-fold from US$78 billion in 2003 to US$444 billion in 2013. Malaysia alone has a trade relationship with China worth more than US$100 billion, making it the third country in Asia, after Japan and South Korea, to reach this milestone trade volume with China. China-ASEAN trade was up by 10.9 percent last year from 2012, a larger percentage increase than the 7.6 percent increase seen by China’s total foreign trade between 2012 and 2013.
The dramatic increase in China-ASEAN trade over the past few years is in part due to a free trade agreement which was implemented at the beginning of 2010. Upon coming into effect, the ASEAN-China Free Trade Area reduced the average tariff rate on Chinese goods exported to ASEAN countries from 12.8 percent to 0.6 percent and the tariff rate on ASEAN goods exported to China from 9.8 percent to 0.1 percent.
As China moves away from its traditional reliance on low-skilled manufacturing towards higher-value production, China and the ASEAN countries’ economies are becoming less competitive and more complementary. From ASEAN’s point of view, China’s rapid urbanization and the rise of its middle-class will stimulate the demand for products and services from ASEAN countries, whereas the ASEAN’s large consumer markets and important manufacturing hubs are a huge draw for China’s businesses.
Going forward, China and ASEAN agreed last year to increase two-way trade to US$500 billion by 2015 and US$1 trillion by 2020. Both sides have also agreed to foster closer economic ties by boosting investment, increasing the use of the renminbi as an alternative trading currency among the ASEAN countries and cooperating to prevent regional financial risk. Negotiations are also currently underway regarding a further simplification of trade between the two sides.
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