Upgrading the China ASEAN Free Trade Area from 1.0 to 3.0

The second round of negotiations on the 3.0 version of the China ASEAN Free Trade Area was recently held in Bangkok, Thailand. The two sides discussed further openness and cooperation in areas such as the digital economy, green economy, trade in goods, investment, and small and micro enterprises. The China ASEAN Free Trade Area 3.0 negotiation was announced to be launched in November 2022. In February of this year, the first round of negotiations was held online, and this round of negotiations was the first offline negotiation between the two sides.
Professor Wang Qin from the Nanyang Research Institute of Xiamen University recently stated in an interview with China Trade Daily that the China ASEAN Free Trade Area is China's first free trade zone to the outside world, and also the first free trade zone for ASEAN as a whole to the outside world. This upgrade to version 3.0 not only helps to further promote trade and investment liberalization and facilitation in existing fields, but also helps to expand cooperation in emerging fields such as the digital economy and green economy, and create a new engine for regional economic growth.
The China ASEAN Free Trade Area was launched in 2002, completed in 2010, upgraded to version 2.0 in 2019, and has now entered the negotiation process of version 3.0. Over the past decade since the establishment of the China ASEAN Free Trade Area, the scale of intra regional trade and investment has rapidly expanded, and the trade and investment effects of regional integration are increasingly evident, "Wang Qin said.
Taking the development of intra regional trade as an example, Lv Daliang, spokesperson for the General Administration of Customs and Director of the Department of Statistics and Analysis, stated at a press conference on the import and export situation in the first quarter held by the State Administration of Customs on April 13th that in the past decade, China's trade with ASEAN has grown by 9.9% annually, faster than China's overall average annual growth rate of 4.3 percentage points. ASEAN has leapt from China's third largest trading partner to its largest trading partner. According to data released by the General Administration of Customs, in the first quarter of this year, China's imports and exports to ASEAN, the largest trading partner, amounted to 1.56 trillion yuan, a year-on-year increase of 16.1%, 11.3 percentage points higher than the overall growth rate, and the scale accounted for 15.8% of the total import and export value.
Pan Nanshan, partner of PwC China International Trade Services, told reporters that obtaining the first quarter foreign trade transcript was not easy, and further deepening cooperation between China and ASEAN and other trading partners played an important role. Last year was the beginning year of the China ASEAN Comprehensive Strategic Partnership and the year when RCEP was implemented. This year, China continued to promote the negotiation process of the 3.0 version of the China ASEAN Free Trade Area. China and ASEAN are highly complementary in industries, markets, and other aspects. Relying on the free trade agreement, economic and trade cooperation will continue to deepen and strengthen, injecting a continuous source of power into the stable development of global trade.
It is worth noting that in Wang Qin's view, after the comprehensive establishment of the China ASEAN Free Trade Area, China and ASEAN have gradually become important nodes in the global value chain and regional production network. He stated that due to the implementation of trade and investment liberalization and facilitation within the region, the scale of direct investment by multinational corporations in the region has been continuously expanding. By investing in factories to create relevant industrial and supply chains, local enterprises have accelerated their integration into the global value chain and regional production networks. China, on the other hand, has become a major supplier of semi-finished products and components to ASEAN countries, relying on its competitive advantage in the manufacturing of intermediate products. The improvement of ASEAN countries' export capabilities from raw materials to components, and then to processing and assembly, assists in the rapid development of industry and quickly integrates into the regional intermediate product supply chain and processing and assembly industry chain.
According to customs data, in the first quarter of this year, China's export of intermediate products to ASEAN reached 531.08 billion yuan, an increase of 17.9%, accounting for 1.7 percentage points more than the same period last year. China and ASEAN complement each other's industrial advantages, accelerate the integration of industrial chain and supply chain development, and drive the growth of intermediate product trade scale.
Wang Qin said that during the operation of the China ASEAN Free Trade Area, China and ASEAN have successively launched the "the Belt and Road" initiative and RCEP. Their development goals and cooperation priorities have many similarities or similarities, which provides practical conditions for the strategic docking and regional cooperation between the two sides. The China ASEAN Free Trade Area has played an important role in promoting connectivity, production capacity cooperation and people to people and cultural exchanges in the construction of the "the Belt and Road". At the same time, it complements and complements the implementation of RCEP, further promoting China ASEAN multi field and in-depth regional cooperation.
Pan Nanshan stated that openness has always been the theme of China's foreign policy, and accelerating the upgrading of the China ASEAN Free Trade Area to version 3.0 is a manifestation of further expanding openness. From the perspective of opportunities, as regional trade and cooperation channels become more open and trade and investment structures continue to optimize, enterprises should seize the opportunity to explore foreign markets, maintain strong adaptability and innovation capabilities, and combine relevant support policies to closely follow the pace of the country's expansion of opening up. From the perspective of challenges, supply chain optimization and adjustment may bring new challenges to domestic enterprises' foreign trade and investment. Therefore, it is recommended that enterprises actively participate in supply chain transformation planning, turn challenges into opportunities, better integrate into the global supply chain value chain, and improve international market competitiveness.