ASEAN-China Economic Relations

5. ASEAN-China Trade Relations: Origins, Progress and Prospect

Trade Relations: Origins, Progress and Prospect 67 5 ASEAN-China Trade Relations: Origins, Progress and Prospect Chen Wen INTRODUCTION The advance of industrialization in China and its continuously high economic growth have attracted worldwide attention. The entry into the WTO in 2001 has brought China into a new era of development. As a large country in East Asia, China has played an increasingly important role in the region’s economic development and cooperation. Since the signing of the “Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China” in November 2002, the economic relationship between China and ASEAN has become closer and closer, where trade relations is the focus. Therefore, this chapter intends to present a survey on the trade relationship between China and ASEAN. The origin of the trade relations between China and ASEAN will be addressed first, followed by the development process of China-ASEAN trade relations, and finally its prospects. ORIGIN Because of history, geo-politics, and past migration in the region, Southeast Asian polities play important roles in China’s surrounding environment, economic development, external economic relations and foreign policy commitment. 05 ASEAN-China ER Ch 5 11/7/06, 4:39 PM 67 68 Chen Wen Trade Relations in Ancient Times Trade relations between China and Southeast Asian countries1 can be traced back to early ancient times, about the third century B.C., when the so-called “maritime Silk Road” went by way of present Southeast Asia from the Chinese southeastern coast.2 Many coastal cities and ports of the Philippines, Indonesia, Malaysia, Vietnam andThailand were on the Silk Road. According to historical records, China had established tributary relations with some Southeast Asia polities by the Sung dynasty (960–1280),3 and the mission under the tribute system was actually a “cloak for trade”.4 So, it is commonly described as “tribute trade”, which is an official trade relationship.5 Especially in the fifteenth century, the Ming dynasty sent many eunuch-led voyages to what we now know as Southeast Asia, among which the Zheng He voyages were very famous. The desire to control maritime trade to the south, to display the might of the Great Emperor, and to collect treasures for the court were the main purposes for the voyages. But these were mainly the formal and regulated tribute trade system. In the late fifteenth century, though private shipping was not formally allowed by the Ming dynasty, maritime private trade with Southeast Asia in Ming China’s southern provinces seemed to have increased. Gradually, the maritime private trade took the place of tribute trade. Since the middle of the eighteenth century, the large number of Chinese emigrants to Southeast Asia further stimulated the trade relations. Anyway, the trade relationship between China and Southeast Asia was close while its value was quite limited. Trade Relations during the 1950s to 1970s Right after the founding of New China, the trade value between China and Southeast Asian countries reached US$76.93 million in 1950, with China’s import standing at US$73.4 million. New China needed to import some basic materials for economic reconstruction, such as rubber, petroleum, nonferrous metals and others. But within two years, the trade value dropped sharply to US$6.91 million since New China was perceived as a threat to some of the Southeast Asian countries. But the attendance of Chinese Premier Zhou at the Bandung Conference revitalized the relationship between China and Southeast Asian countries, which rejuvenated the trade relations in the following several years. According to Shao’s paper, China began to export industrial products to Southeast Asia in 1954. Its trade relations with Southeast Asia was to import essential materials from Southeast Asian countries for its national construction, to propagandize its industrial progress, to show its 05 ASEAN-China ER Ch 5 11/7/06, 4:39 PM 68 Trade Relations: Origins, Progress and Prospect 69 ability for economic construction to the world, and to promote closer relations with the Southeast Asian countries.6 The Chinese Government paid attention to establishing good economic relations with its neighbours, which can be illustrated by the “First Five-Year Plan”.7 But owing to the Cold War and China’s ideology of self-dependence, the trade volume with Southeast Asia was quite small during the 1950s and 1960s. The trade relationship for the period was full of twists and turns due to complex political and ideological factors,8...