Economic ties with ASEAN set to become even closer

At the China-ASEAN Special Summit on Nov 22, President Xi Jinping set out a road map for further strengthening China-ASEAN economic relations, under the framework of the new China-ASEAN Comprehensive Strategic Partnership. The enhanced relationship reflects the rapid growth of bilateral economic ties.

China-ASEAN economic ties have grown at a very rapid rate over the past three decades. Trade in goods between the two sides has risen at a remarkable rate, increasing from just $9 billion in 1991 to $685 billion in 2020. In 2020, the Association of Southeast Asian Nations also surpassed the European Union to become China's largest trading partner for the first time. From the ASEAN perspective, China has already been the largest market for ASEAN exports for the past 12 years.

Bilateral investment ties have also soared. In 2020, China's direct investment in ASEAN reached $14.4 billion, up 52 percent, and ASEAN's actual investment in China reached $8 billion. According to preliminary statistics, in the first half of 2021, Chinese companies invested $6.8 billion in ASEAN, and ASEAN investment in China was $5.6 billion.

Against this backdrop of rapidly strengthening economic ties, President Xi noted that China and ASEAN have taken strides toward building a closer community with a shared future and made important contributions to the cause of human progress. He also stressed upgrading China-ASEAN bilateral economic relations.

A wide range of new economic initiatives are proposed under the framework of the new China-ASEAN Comprehensive Strategic Partnership.

Thanks to strong bilateral efforts to build economic cooperation, China and ASEAN have built a very strong economic partnership. One important pathway to strengthening economic cooperation over the past decade or so has been through the establishment of free trade areas. A key trade agreement that has helped to foster bilateral trade has been the China-ASEAN Free Trade Area. The new Regional Comprehensive Economic Partnership agreement among 15 Asia-Pacific nations, including China and all 10 ASEAN members, will help to further build trade and investment ties.

As part of China's bilateral trade initiatives with ASEAN, the nation will buy $150 billion of agricultural products from ASEAN over the next five years. The agricultural sector remains a key part of the economy for many ASEAN nations, so the initiatives will be an important new opportunity for ASEAN's farming and agricultural processing sector.

Another key platform for bilateral economic cooperation over the past decade has been infrastructure development across ASEAN member nations through the China-proposed Belt and Road Initiative.

Many infrastructure projects have already been built or are under construction in ASEAN nations as part of the BRI. Under the China-ASEAN Comprehensive Economic Partnership, China is offering additional high-quality BRI partnership projects to ASEAN. China is also proposing a new China-ASEAN Digital Governance Dialogue to deepen cooperation in digital technology.

The additional $1.5 billion of development assistance announced by President Xi for ASEAN over the next three years will support Southeast Asia's economic recovery from the COVID-19 pandemic. The additional 150 million doses of COVID-19 vaccines to ASEAN not only can help increase vaccination rates, but also show the mutual assistance within the larger East Asian community. East Asian nations have increasingly been helping each other through many forms of challenges, including the current pandemic, natural disasters and economic crises.

The wide range of new Chinese initiatives will accelerate trade and investment flows and boost ASEAN economic recovery from the global pandemic, which bodes well for greater economic cooperation between China and ASEAN economies in the decade ahead.

In a broader perspective, following the Asian tradition of "sharing bliss and misfortune together", President Xi has outlined a vision for China and ASEAN to work for building a peaceful, safe and secure, prosperous, beautiful and amicable home together, which reflects China's policy proposals and goals for the Global Development Initiative.

China's GDP is forecast to increase from $14.7 trillion in 2020 to $32.4 trillion by 2030.ASEAN's GDP is projected to increase from $3 trillion in 2020 to $6.8 trillion by 2030. These will help to underpin sustainable future growth not only for trade and investment ties between the two sides, but also for inclusive and common development with shared benefits.

The author is Asia-Pacific chief economist for IHS Markit, an information, analytics and solutions provider.