The Chinese Ministry of Commerce announced this week that October meetings held between China and ASEAN (Association of Southeast Asian Nations) produced a consensus on issues concerning trade of consumer goods and the establishment of a system for conflict resolution. Starting in January 2005, China and ASEAN will carry out plans to gradually reduce trade tariffs on consumer goods with the goal of establishing a free-trade zone by 2010.

 

The details of tariff reduction initiative were hammered out during negotiations held in Beijing from October 18-20, building upon the economic cooperation framework signed in December 2002. The formal signing of the new tariff agreement will be held in November 2004 at a China-ASEAN leaders summit. The free trade zone will be world's largest once it opens. It will cover more than one third of the world's population, with a total trade volume of US$1.2 trillion and total GDP of US$2 trillion.

 

ASEAN has been China's fifth largest trading partner for the last eleven years. Trade between China and the countries of ASEAN has grown by an average of 20% per year since 1990. Last year, trade volume reached US$78.2 billion. Early figures for 2004 show that from January to September, trade volume soared to approximately US$75.5 billion, marking 35-36% year-on-year growth. Some project that trade volume between China and ASEAN could top US$100 billion by the year's end.

 

Mutual investment between Southeast Asian nations and China has been on the rise in recent years. The latest figures show that from January to June 2004, ASEAN nations have invested a total of US$34 billion in China. Chinese companies have agreed to invest US$1 billion in South East Asian nations for projects such as building construction, hotels, electronics, mining, and transportation.