Establishing the ASEAN-China Common Market has been a long-discussed topic, and there is a growing consensus that it is now overdue. The ASEAN-China relationship has witnessed significant growth and transformation over the years, and the two regions have become increasingly interdependent. As the two major economic powerhouses in the Asia-Pacific region, ASEAN and China have recognized the mutual benefits of trade and have taken steps toward deepening economic integration.
This talk explores the progress and potential of ASEAN-China trade, the proposed ASEAN-China Common Market, the strategic economic cooperation option, the modus operandi of the first trade agreement between the two groupings, and the main results of regional integration. Ultimately, it highlights the importance of continued collaboration to harness the full potential of this vital economic partnership.
The trade between ASEAN and China has experienced remarkable expansion, with China being ASEAN's largest trading partner since 2009. Bilateral trade has consistently increased, surpassing the USD 650 billion mark in 2020. ASEAN and China have benefited from this trade relationship, with ASEAN exporting commodities such as electrical machinery, mineral fuels, and palm oil while importing manufactured goods from China, such as machinery, electronics, and textiles. The trade has fostered economic growth, job creation, and technology transfer in both regions.
The Size of the ASEAN-China Common Market
The proposed ASEAN-China Common Market envisions a deeper level of economic integration between the ASEAN member states and China. This initiative aims to enhance trade facilitation and investment flows and promote a more seamless movement of goods, services, and skilled labor across borders. The ASEAN-China Common Market holds immense potential with a combined population of over 1.8 billion people and a collective GDP of approximately USD 16 trillion. However, realizing this potential requires addressing challenges such as regulatory harmonization, infrastructure development, etc.
The proposed Common Market provides a strategic economic cooperation option for China and ASEAN to deepen economic integration. Both parties can unlock more significant economic opportunities and strengthen their competitive advantage in the global market by aligning their economic policies, reducing trade barriers, and enhancing connectivity. The Common Market can foster innovation, technology transfer and promote sustainable development, benefiting established and emerging sectors. It also offers enhanced people-to-people exchanges, cultural cooperation, and tourism between ASEAN and China.
Elements of Regional Integration
The regional integration between ASEAN and China is expected to enhance regional cooperation and foster economic growth. The ASEAN-China Free Trade Area (ACFTA) and the Belt and Road Initiative (BRI) have boosted trade and investment flows, promoted infrastructure development, and facilitated connectivity.
Multiple Groups in Asia-Pacific
The Asia-Pacific region is home to a number of regional economic groupings, each with its own goals and objectives. India is trying to push Global South, Thailand's Chiang Mai Initiative focuses on a cross-currency exchange, and we lead the IPEF (Indo-Pacific Economic Framework). Take the Chiang Mai Initiative as an example; it has already included all ASEAN member states, Japan, Korea, and China. Seven ASEAN member states that are part of this initiative are also in the IPEF. This means a high level of ASEAN member states overlap between regional groupings.
Another example is APEC (Asia-Pacific Economic Cooperation) and CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), including some ASEAN members. The RCEP (Regional Comprehensive Economic Partnership) also includes China and some members from ASEAN. And China has it's leading the Belt and Road Initiative. There are other smaller groupings, including the two corridors and the one economic circle, where only China and Vietnam are members, with no other ASEAN members. Recently, China has prepared Hainan Province to become another regional center. Of course, we look forward to having Hainan Province work more closely with ASEAN. Hainan Province is likely to play an important role if there is a new common market.
Why A New Group?
If China and ASEAN are going to participate in a new regional integration, what can a China-ASEAN common market deliver that the others cannot? The RCEP mentioned earlier has been largely effective. Even though they have only been set up for a year, if we look at the statistics, these groupings have encouraged investment between ASEAN and China among Asian players. This can be seen in the agricultural sector. Under these new treaties, China can import some agricultural products from as far as Vietnam and the Philippines, whereas Thailand was the furthest destination back in the old days. Most people agree that ASEAN and China should further regional integration. The question is, why do we need to achieve this goal? And if so, what will happen to the other groupings that ASEAN members are also a part of?
For instance, if India wants to be a superpower, it can create another regional grouping to enhance control of the South Pacific region. Why does India want to control this region if it is not a South Pacific country? This is because India is more or less involved in all businesses in South Pacific. I am Chinese by blood, was born in Thailand, and was adopted in Taipei. Suppose you want to use the same criteria to explain China's interests in merging deeply and fully with ASEAN. In that case, most of the elite businesspeople in ASEAN are of Chinese blood, including businesspeople in Thailand, Indonesia, and the Philippines. My original last name is Lin, the same as the new prime minister of Thailand. In Thailand, even if you have Indian or Pakistani origins, once you embrace the Thai culture, use the Thai name, and speak Thai, your origins will be less important. So, I want to ask everyone to consider what arrangements these existing groupings cannot offer. Why do we need another grouping? If you have achieved these already, joining another group is unnecessary.
Goals and Questions
Another point is that there is only one central bank after European integration. But in Asia, ASEAN, China, Japan, and Korea combined have 14 central banks. They all offer different policies, interest rates, and money supplies, whereas, in Europe, they have the same currency to standardize their monetary interest rates. But at the moment, under the Chiangmai Initiative, we only need to have our currencies, such as the Chinese Yuan, Japanese Yen, and Thai Baht, thrown into a currency basket. When countries are stuck in crises, they can borrow money from the basket, but still in their original currencies, the Yuan, Yen, and Thai Baht. However, in the integrated EU, where only one currency exists, there is a common pool if a country is in crisis. So, the question is, what is the point of creating another regional grouping if we have 6 or 7 already?