The Association of Southeast Asian Nations (ASEAN) is a critical trade and investment partner for China due to its vast geographical scope, diversity of strategic trade routes, large population and rapidly growing economy. In recent years, trade and investment relations between China and the 10 ASEAN member countries (Singapore, Indonesia, Malaysia, Thailand, Thailand, Vietnam, Cambodia, Laos, Myanmar, Brunei, Myanmar, Brunei and the Philippines) have grown significantly, indicating deepening economic ties between the two regions. This growth has been supported by the signing of several trade and investment agreements that have expanded cooperation and reduced trade barriers. The partnership between ASEAN and China offers significant opportunities for businesses in the region. It creates opportunities for improved market access, increased competitiveness and deepened economic cooperation.
Relations between China and ASEAN have developed rapidly over the past two decades. China promoted economic integration in the region by proposing the establishment of a free trade area with ASEAN in November 2000. This initiative was welcomed by ASEAN and Chinese leaders and a year later, the ASEAN-China Free Trade Area was established in Brunei. This zone initially covered the six ASEAN members, with the aim of eliminating tariffs on 90% of products by 2010.
Between 2003 and 2008, the volume of trade between ASEAN and China increased from USD 59.6 billion to USD 192.5 billion. During this period, as China’s economic power has grown, the number of overseas Chinese enterprises operating in Southeast Asian markets has also increased significantly. In 2008, the combined nominal Gross Domestic Product of ASEAN and China was recorded at approximately USD 6 trillion. In 2010, the average tariff rate on Chinese goods sold in ASEAN countries was reduced from 12.8% to 0.6%, while the average tariff rate on ASEAN goods sold in China was reduced from 9.8% to 0.1%. These developments have strengthened economic ties between the two sides, with the ASEAN-China Free Trade Agreement (ACFTA) boosting trade cooperation and direct investment. In 2015, total merchandise trade between ASEAN and China reached $346.5 billion, accounting for 15.2% of ASEAN trade.[i]
ASEAN as a bloc surpassed the European Union in 2020 to become China’s largest trading partner. In 2023, trade with ASEAN countries accounted for 15.9% of China’s total foreign trade, while total bilateral trade volume increased by 10.5% year-on-year to RMB 3.36 trillion (USD 468.8 billion). China continues to run a trade surplus with ASEAN; in 2023, China exported goods worth RMB 2.03 trillion (US$283.2 billion) to ASEAN countries, up 14.2%, and imported goods worth RMB 1.33 trillion (US$185.6 billion), up 5.2%.[ii]
Vietnam is China’s largest trading partner in the ASEAN bloc. In 2023, the total trade volume between Vietnam and China reached RMB 1.6 trillion (US$223.2 billion). Vietnam, Malaysia, Indonesia, Thailand, Singapore, Thailand, Singapore and the Philippines account for the vast majority of China’s trade with ASEAN. In 2023, the remaining four countries (Laos, Cambodia, Myanmar and Brunei) accounted for only 5% of ASEAN’s trade with China. Since 2022, Indonesia has replaced Thailand as the third largest trading partner in the ASEAN bloc. In 2023, Indonesia accounted for 16.1% and Thailand 14.6% of ASEAN’s total trade with China. China and ASEAN became China’s largest intermediate goods trading partner with bilateral intermediate goods trade amounting to USD 4.13 trillion (USD 576.2 billion) in 2023. Cooperation between China and ASEAN has also deepened in sectors such as green energy and consumer electronics. China’s exports of lithium batteries and solar cells and imports of audio and video equipment parts to ASEAN have increased rapidly.[iii]
According to ICT Trade Map data, China’s largest exports to ASEAN countries in 2023 were electrical machinery and equipment worth USD 128.66 billion and nuclear reactors, boilers, machinery and mechanical appliances worth USD 64.94 billion. These export items were followed by mineral fuels and mineral oils worth USD 20.05 billion and plastics and plastic goods worth USD 18.50 billion.[iv]
These developments in China-ASEAN economic relations demonstrate the deepening nature of trade between the two regions and the growing importance of ASEAN in China’s economic strategies. With the potential to influence global economic balances, this relationship will remain strategically important in the future.
At the ASEAN-China Week 2024, Chinese Foreign Minister Wang Yi emphasized the importance of joint efforts between the two sides to accelerate coordinated development and promote new quality productive forces in the region. Wang Yi said that China-ASEAN relations have unlimited potential and that the two sides should continue to explore new areas of cooperation and seize the opportunities of the new technological and industrial revolution.[v]
The future of relations between China and ASEAN largely depends on developments in economic cooperation and innovation. Under the influence of the ASEAN-China Free Trade Agreement, trade volume has steadily increased and China has become ASEAN’s largest trading partner. This trend suggests that regional economic integration and interdependence will deepen further. China’s Belt and Road Initiative (BRI) has been an important source of infrastructure and economic growth for ASEAN countries and has played a key role in the development of ASEAN countries.
In the future, an innovation-oriented cooperation model will dominate the relationship between China and ASEAN. The digital economy, green technologies and new growth areas will further strengthen trade ties between the two sides. At the same time, people-to-people exchanges and strengthening cultural ties between China and ASEAN countries will contribute to building a closer community in the region.
The future of this relationship is not only based on economic cooperation. Factors such as regional and global political balances, security concerns and China’s claims in the South China Sea may test ASEAN-China relations from time to time. In this context, dialogue and diplomacy between the two sides will be critical in preventing potential conflicts and maintaining regional stability. Maintaining ASEAN’s internal cohesion and pursuing a policy of balance in its relations with China are among the key elements that will determine the sustainability and success of this regional partnership.
In conclusion, the relationship between China and ASEAN is deepening with developments in economic cooperation and innovation, while adopting an approach based on mutual understanding and diplomacy to overcome political and security challenges. The future of this relationship will depend on how both sides manage this potential.
[i] “Work Together to Open a New Chapter in China-ASEAN Relations”, Ministry of Foreign Affairs The People’s Republic of China, https://www.fmprc.gov.cn/mfa_eng/xw/zyjh/202405/t20240530_11339882.html, (Accessed: 13.08.2024).
[ii] “China-ASEAN Trade and Investment Relations”, China Briefing, https://www.china-briefing.com/news/china-asean-trade-and-investment-relations/, (Accessed: 13.08.2024).
[iii] Aynı yer.
[iv] “Opening doors in the ASEAN-China corridor”, HSBC, https://www.business.hsbc.com/en-gb/insights/accessing-capital/opening-doors-in-the-asean-china-corridor, (Accessed: 13.08.2024).
[v] “Wang Yi calls for coordinated development between China and ASEAN”, CGTN, https://news.cgtn.com/news/2024-08-13/Wang-Yi-calls-for-coordinated-development-between-China-and-ASEAN-1w1ytIhOryo/p.html, (Accessed: 13.08.2024).
