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China's Belt and Road Initiative and ASEAN

June 18, 2020


Abstract : China and the ASEAN have enjoyed robust trade development, especially after the Belt and Road Initiative was proposed in 2013.

ASEAN and Belt and Road Initiative

In March 2015, when China issued The Vision and Actions on Jointly Building the Silk Road Economic Belt and the 21st Century Maritime Silk Road policy initiative, it came as no surprise that strong emphasis was placed on orienting the trade routes towards ASEAN countries with a proposed China-Indochina Peninsula Economic Corridor.

ASEAN countries have long been the key trading partners of China. Since the launch of the China-ASEAN Free Trade Area (CAFTA) in 2010, improved institutional co-ordination and increasingly sophisticated intra-regional supply chains have driven China-ASEAN bilateral trade to new heights. Bilateral trade has grown significantly at an average annual rate of 18% between 2009 and 2014. To deepen multilateral co-operation, China and ASEAN began negotiating an upgrade of the existing CAFTA pact in 2014, with a focus on strengthening investment, trade in goods and services, and economic and technology co-operation. The discussion, likely to be concluded by the end of 2015, is expected to further enhance ASEAN's crucial role in the Belt and Road Initiative and to facilitate further regional integration.

Photo: China-Indochina Peninsula Economic Corridor

Mainland Southeast Asia, or the Indochina peninsula, is connected to China by land. The transnational transport network of the Greater Mekong Sub-region (GMS), of which Guangxi and Yunnan provinces are members, in combination with the proposed maritime silk road that will link major sea ports along the coasts of Vietnam, Cambodia, Thailand and Myanmar, will intensify China-ASEAN trade and industrial co-operation. It will also extend the economic benefits further afield to South Asia and Western Asia when the new multimodal transportation networks are in place.

Transportation Network in the China-Indochina Peninsula Economic Corridor

In building the China-Indochina Peninsula Economic Corridor, China will piggyback on the economic co-operation mechanisms of the GMS. During the Fifth Leaders Meeting on Greater Mekong Sub-regional Economic Co-operation, held in Bangkok in December 2014, Chinese Premier Li Keqiang put forward three suggestions with regard to deepening the relations between China and the five countries in the Indochina Peninsula. These were: (1) to jointly plan and build an extensive transportation network, as well as a number of industrial co-operation projects; (2) to create a new mode of co-operation for fundraising; and (3) to promote sustainable and co-ordinated socio-economic development. Currently, the countries along the Greater Mekong River are engaged in building nine cross-national highways, connecting east and west, and linking north to south.

Land Transportation

The nine highways linking the GMS intersect with the ‘East-West Economic Corridor’, ‘North-South Economic Corridor’ and ‘Southern Economic Corridor’, and form the backbone of the GMS transportation infrastructure. These three major economic corridors will integrate infrastructure development with trade, investment and other economic opportunities of the GMS countries.

The North-South Economic Corridor has been taking shape with the opening of the whole Kunming-Bangkok Highway in 2013, while China has also completed construction of an expressway in Guangxi leading to the Friendship Gate and Dongxing Port at the China-Vietnam border. The highway from Kunming to its borders with Myanmar and Vietnam has also been upgraded.

Building upon existing infrastructure, China and Thailand are working to improve cross-border rail networks. Construction is scheduled to begin in October 2015 on a new dual-track railway that will connect Laem Chabang (Thailand’s largest port) with Nong Khai, an industrial border area near to the Laotian capital of Vientiane, and to run further to Kunming. A high-speed rail link between Kunming and Kolkata in India, crossing Myanmar and Bangladesh, is also under study.

The China-led Asia Infrastructure Investment Bank (AIIB), with its focus primarily on infrastructure projects in Asia, is expected to play a constructive role in bridging the huge investment gap in funding ASEAN’s major cross-border infrastructure projects, such as the ASEAN Highway Network and Singapore-Kunming Rail Link.

Sea Transportation

Maritime co-operation is essential to building the 21st Century Maritime Silk Road. Currently, Vietnam and Thailand have the most developed seaport facilities among the GMS countries.

China and the maritime ASEAN countries are actively investing in their maritime infrastructure. The Philippines is promoting its Strong Republic Nautical Highway to enhance inter-island connectivity, while Indonesia announced its Maritime Axis policy doctrine in 2014. Besides, China has carried out a variety of ocean-related co-operations with Indonesia, Thailand, Malaysia, India and Sri Lanka, including a China-Malaysia joint port project in Malacca.

Air Transportation

Air connectivity is also key to completing a comprehensive sea, land and air integrated network. The ASEAN Open Skies policy, effective from 2015, is set to enhance regional trade by allowing airlines from ASEAN countries to fly freely throughout the region under a single, unified market. ASEAN has also recently concluded an exchange of fifth freedom air traffic rights between ASEAN countries and China, allowing Chinese carriers to use ASEAN gateway city airports to fly beyond.

Within China, Kunming is seen to be the main airline transit point to ASEAN and South Asia, with more than half of its international flights destined for Southeast Asian countries. In total, Kunming has air routes to more than 20 cities in ASEAN and South Asian countries, including newly added direct flights to Koh Samui and Krabi Island in Thailand, and Siem Reap in Cambodia.

Custom Reforms Fuel Cross-border Trade and Investment

Aside from infrastructure upgrade, GMS countries are keen to enhance regional connectivity through introducing one-stop customs and harmonised administrative measures across their borders. Thailand, for example, has introduced e-logistics at its borders with other GMS countries and a One Stop Export Service Centre to improve logistics efficiency. Laos and Vietnam have recently launched single-window inspection at their border checkpoints, while China and Thailand are also working to streamline their respective import regulations.

In March 2015, China’s General Administration of Customs (GAC) announced it would introduce customs clearance integration reforms in provinces along the Silk Road Economic Belt. Under reforms that took effect in May 2015, companies in Chinese cities within the Economic Belt have the option to go through customs formalities (including declaration, tax payment and goods inspection) either through their local in-charge customs houses, or via port customs through which  goods are either imported or exported.

Accelerating Cross-border E-commerce

E-commerce has played an increasingly important role in stimulating international trade in recent years. With the ASEAN Economic Community (AEC) set for formal establishment by the end of 2015, and the promotion of e-commerce as a means to expand trade under China’s Belt and Road Initiative, cross-border e-commerce is likely to further accelerate.

China has been exploring ways to tap into the ASEAN e-commerce market. Yunnan and Guangxi have taken the lead in this, given their strategic locations and geographical proximity to mainland Southeast Asia. In 2013, the Chinese government designated Yunnan and Guangxi as the border financial comprehensive reform pilot areas, with the aim to facilitate trade and investment activities in the two provinces and to promote the use of the Renminbi in the China-Indochina Peninsula Economic Corridor and the Bangladesh-China-India-Myanmar Economic Corridor. These reform measures help to reduce costs and facilitate regional trade. China has also raised the cash limit that individuals are allowed to carry when crossing the border from RMB20,000 to RMB200,000.

At the seventh GMS Economic Corridors Forum held in June 2015, ministers from the six GMS countries endorsed the GMS cross-border e-commerce co-operation platform framework that China proposed, with a view to promoting cross-border trade and facilitate goods and commodity flows. Key areas of co-operation will cover co-operation of e-commerce enterprises, facilitation of cross-border e-commerce customs procedures, investment in cross-border e-commerce infrastructure, improvement of the e-commerce supporting services systems and building the capacity of e-commerce.

At the China-ASEAN e-commerce summit held in Nanning in September 2015, it was announced that Nanning had become a state-level cross-border e-commerce pilot city, with the establishment of the China-ASEAN e-commerce park and the participation of leading Chinese e-commerce companies such as Jingdong, Tencent, Alibaba and Meiliwan. To provide better services and facilitate trade flows, Guangxi will strengthen co-operation with ASEAN countries in customs, import / export inspection and quarantine, as well as other information exchanges. According to the Regional Department of Commerce Office, Guangxi’s e-commerce trade value rose 65.9% to RMB210 billion in 2014 and increased further by 84.7% to RMB 194 billion in the first half of 2015.

Mainland e-commerce companies are also moving quickly to explore the new models of cross-border e-commerce with ASEAN. Tmall Global, China’s leading e-commerce platform, announced in 2015 that it would launch a partnership duty-free shop project with King Power, Thailand’s largest duty-free group. Under the agreement, Chinese tourists will be allowed to buy stored-value cards online prior to travelling abroad, and be able to collect the purchased items from five of King Power’s duty-free shops upon arrival in Thailand.

People visit the exhibition area of Cambodia at the 16th China-ASEANExpo in Nanning, capital of south China's Guangxi Zhuang Autonomous Region on Sept. 23, 2019. An exhibition themed on the "City of Charm" of ten ASEANcountries was held here to display the ten countries' cultures. (Xinhua/Zhang Ailin)

ASEAN-CHINA RELATIONS (Updated in March, 2020)

Source:ASEAN-China Centre

Overview

The year 1991 marked the beginning of ASEAN-China dialogue process. In 1996, China became a full dialogue partner of ASEAN. In 1997, the first informal ASEAN-China Summit was held in Kuala Lumpur, Malaysia, during which the leaders of the two sides announced their decision to establish a 21st century-oriented partnership of good neighborliness and mutual trust between ASEAN and China. In 2003, among all ASEAN’s dialogue partners, China took the lead in acceding to the Treaty of Amity and Cooperation in Southeast Asia. The two sides decided to upgrade ASEAN-China relationship to strategic partnership for peace and prosperity. In December 2008, China appointed its first Ambassador to ASEAN. In November 2011, the ASEAN-China Centre (ACC) was established officially. As a one-stop information and activities centre, ACC has exerted its role to promote cooperation between ASEAN and China in the areas of trade, investment, education, culture, tourism, information and media. In September 2012, China set up its Permanent Mission and began posting Ambassadors to ASEAN.

The year 2006 marked the 15th Anniversary of the establishment of ASEAN-China dialogue relations, with the successful convening of the ASEAN-China Commemorative Summit in Nanning, Guangxi, China. In 2011, the year of the 20th Anniversary of ASEAN-China Dialogue Relations, the leaders of ASEAN and China exchanged congratulatory messages, and the two sides held a series of events such as the Commemorative Summit and receptions. In the year 2013 which marked the 10th Anniversary of ASEAN-China strategic partnership, both sides held celebrations including Special ASEAN-China Foreign Ministers’ Meeting, Special Transport Ministers’ Meeting on Connectivity, ASEAN-China High-Level Forum, etc. In October 2013, Chinese President Xi Jinping paid visits to Indonesia and Malaysia, proposing jointly building a closer ASEAN-China Community with a Shared Future and the Maritime Silk Road of the 21st century. In 2014, the ASEAN-China Cultural Exchange Year, the leaders of China, Myanmar, the rotating chair of ASEAN, and Thailand, the coordinator of ASEAN-China Relations sent congratulatory letters respectively to its opening ceremony. The year 2016 was the 25th Anniversary of ASEAN-China dialogue relations and the ASEAN-China Year of Educational Exchange. In 2017, the year of the 50th Anniversary of the founding of ASEAN, President Xi Jinping sent a congratulatory message to President Rodrigo Duterte, President of the Philippines, the rotating chair of ASEAN. As 2017 was also the ASEAN-China Year of Tourism Cooperation, Li Keqiang, Premier of the State Council of China, and President Duterte sent congratulatory letters respectively to its opening ceremony. The year 2018 marked the 15th Anniversary of ASEAN-China strategic partnership, and it was the ASEAN-China Year of Innovation. In 2019, the ASEAN-China Year of Media Exchanges, President Xi Jinping and Prayut Chan-o-cha, Prime Minister of Thailand, the rotating chair of ASEAN, sent congratulatory letters respectively to its opening ceremony. The year 2020 has been designated as the ASEAN-China Year of Digital Economic Cooperation.

ASEAN and China have kept close coordination and cooperation on international and regional issues. China firmly supports ASEAN’s centrality in regional cooperation, and supports ASEAN in playing a bigger role in developing an open and inclusive regional architecture. Both sides have jointly dedicated to promoting the sound development of regional cooperation in East Asia, and have been coping with the existing and potential challenges within the region. The two sides have also maintained good communication and collaboration within the cooperation mechanisms including ASEAN Plus China, Japan and ROK (ASEAN Plus Three), East Asia Summit, ASEAN Regional Forum, Asia Cooperation Dialogue, APEC, etc.

Economic and Trade Cooperation

In November 2002, ASEAN and China signed the Framework Agreement on Comprehensive Economic Cooperation, kicking off the process of building the ASEAN-China Free Trade Area (ACFTA). In January 2010, ACFTA was fully completed. In 2014, the two sides launched the negotiations for upgrading the FTA. In November 2015, the two sides signed the Protocol to Amend the Framework Agreement on Comprehensive Economic Cooperation and Certain Agreements thereunder between ASEAN and China, marking the successful conclusion of the FTA-upgrading negotiations. In October 2019, the ASEAN-China FTA Upgrading Protocol took full effect. In November 2019, the 15 Regional Comprehensive Economic Partnership (RCEP) participating countries (including China and 10 ASEAN Member States) concluded text-based negotiations.

According to the Ministry of Commerce of China, the two-way trade between ASEAN and China reached USD641.46 billion in 2019, growing by 9.2% over the previous year. China’s export to ASEAN reached USD359.42 billion, growing by 12.7% over the previous year and China’s import from ASEAN reached USD282.04 billion, growing by 5.0%. China has remained ASEAN’s top trading partner for 11 years consecutively, and ASEAN rose to be China’s second largest trading partner trailing the European Union.

According to the Ministry of Commerce of China, at the end of December 2019, the accumulated two-way investment between ASEAN and China reached USD236.91 billion. China’s investment to ASEAN reached USD112.30 billion, and ASEAN’s investment to China reached USD124.61 billion. The two-way investment has maintained a substantial growth. In 2019, China’s non-financial direct investment to ASEAN reached USD9.39 billion, dropping by 7.0% on annual basis, and ASEAN’s investment to China reached USD7.88 billion, growing by 37.7%, much higher than the 12.5% growth rate scored in the previous year. The year 2019 was the second consecutive year that ASEAN became the second largest destination for China’s foreign investment. ASEAN is the third largest source of investment for China, trailing Hong Kong SAR and the British Virgin Islands.

People-to-People Exchanges

The people-to-people exchanges and cooperation between ASEAN and China have enjoyed quite a boom along with many highlights. In forms of ministerial-level meetings, forums&seminars, personnel training, cultural dialogues, art exhibitions&performances, theme years (such as cultural and tourism years), the two sides have conducted cooperation and exchanges that enhanced mutual understanding and appreciation of each other’s culture, and forged the bond of friendship among the peoples. China has signed agreements on educational exchanges and cooperation with the 10 ASEAN Member States, and the agreements on mutual recognition of higher education qualification and degrees with Indonesia, Malaysia, the Philippines, Thailand and Viet Nam. The two-way flow of students now exceeds 200,000. Chinese universities have opened majors covering the official languages of all ASEAN Member States. 38 Confucius institutes are running in ASEAN countries (as of November 2019). Since 2008, the China-ASEAN Education Cooperation Week (CAECW) has been held for 12 consecutive editions, and it has gradually developed into an important platform for educational cooperation and people-to-people exchanges between ASEAN and China. All the 10 ASEAN Member States have signed cultural cooperation documents with China, and a memorandum of understanding on cultural cooperation between ASEAN and China was signed in 2005. Since 2006, the China-ASEAN Cultural Forum has been successfully held for 14 times, which expanded space for dialogue and cooperation in the fields of cultural industries, art creation, cultural heritages, public service, festival activities and art education. All the 10 ASEAN Member States have signed agreements with China in the field of education. The Philippines, Malaysia, Viet Nam and Thailand have signed bilateral agreements with China on mutual recognition of academic degree and diploma. China has set up 7 cultural centres in ASEAN Member States. Other brand activities such as China-ASEAN Expo, “Happy Chinese New Year”, and “Beautiful China” have also received warm welcome, and “Mandarin Fever” has kept growing in ASEAN Member States.

China and ASEAN are each other’s important source of inbound tourists and travel destination. In 2019, the mutual visits exceeded 65 million in total, and around 4,500 flights travelled between China and ASEAN Member States per week. China is implementing a pilot project of people-to-people exchanges called China-ASEAN Young Leaders Scholarship Program. China has also carried out the “Bridge of the Future” China-ASEAN Young Leaders Training Program, aimed at training 1,000 young talents from ASEAN in China. China also plans to train 1,000 ASEAN administrative and specialized personnel in the health sector under the China-ASEAN Human Resources Training Program of Health Silk Road (2020-2022).

Cooperation Mechanisms

ASEAN and China have established a range of dialogue and cooperation mechanisms, mainly including summits, foreign ministers’ meetings, ministerial-level meetings, senior officials’ meetings, etc.

1. ASEAN-China Summit. Since 1997, the ASEAN-China Summit has been held for 22 times, with the main purpose of making strategic planning and giving guidance on the development of ASEAN-China relations. Besides, several Special Summits have been convened, including the Special ASEAN-China Leaders Meeting on SARS in 2003, the Commemorative Summit Marking the 15th Anniversary of ASEAN-China Dialogue Relations in 2006, etc.

In November 2018, the 21st ASEAN-China Summit in Commemoration of the 15th Anniversary of ASEAN-China Strategic Partnership was held in Singapore, and it issued documents including the ASEAN-China Strategic Partnership Vision 2030, the ASEAN-China Joint Statement on Science, Technology and Innovation Cooperation. In November 2019, the 22nd ASEAN-China Summit was held in Bangkok, Thailand. It announced the decision to formulate the Plan of Action to Implement the Joint Declaration on ASEAN-China Strategic Partnership for Peace and Prosperity (2021-2025), and issued joint statements on Synergizing the Belt and Road Initiative and the Master Plan on ASEAN Connectivity 2025, Smart City Cooperation and Deepening Media Exchange and Cooperation.

2. ASEAN-China Foreign Ministers’ Meeting. It is designed to coordinate the implementation of deliverables of the previous Summit, and to prepare for the upcoming Summit. In July 2019, the ASEAN-China Foreign Ministers’ Meeting was held in Bangkok, Thailand. Chinese State Councilor and Foreign Minister Wang Yi attended the meeting. In February 2020, the Special ASEAN-China Foreign Ministers’ Meeting on Coronavirus Disease (COVID-19) was held in Vientiane , Laos, during which a joint statement was released.

3. Ministerial Meeting. ASEAN and China have established more than 10 ministerial meeting mechanisms in the fields of foreign policy, defense, commerce, culture, education, transportation, customs administrators, attorney generals, health, telecommunication, press, quality inspection, law enforcement&security, etc.

4. Senior Officials’ Meeting. It is normally convened before the ministerial meeting, with the main function of reviewing and envisaging ASEAN-China relations, and making preparations for the ministerial-level meeting and foreign ministers’ meeting. The Senior Officials’ Meeting is attended by senior officials from relevant authorities of ASEAN and China.

5. ASEAN-China Joint Cooperation Committee (ACJCC). The ACJCC meeting is annually held in Jakarta, Indonesia, and it is attended by members of the Committee of Permanent Representatives to ASEAN (CPR) and Chinese Ambassador to ASEAN, with the purpose of promoting the cooperation in various areas between ASEAN and China. In April 2019, the 20th ACJCC Meeting was held at the ASEAN Secretariat in Jakarta, Indonesia.

About the Belt and Road Initiative

The Belt and Road Initiative is the abbreviation of the Silk Road Economic Belt and the twenty-first Century Maritime Silk Road (abbreviated BRI).BRI is a development initiative that focuses on connectivity and cooperation among countries. It consists of two main components, the land-based "Silk Road Economic Belt" and oceangoing "21st-century Maritime Silk Road".


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