The ASEAN-China Free Trade Agreement and East Asian Regional Grouping

Despite growing enthusiasm for an East Asian economic grouping in the wake of the Asian financial crisis, the decision of ASEAN and China to move toward an FTA still came as a major shock. However, the move is the result of rational calculations by the political leaders of ASEAN and China of possible costs and benefits that such an FTA will bring. It reflects ASEAN's and China's active response to the challenges brought about by the intensifying regionalism in the global economy, the growing economic ties between them, and the impact of the Asian financial crisis. The movement toward an FTA is a significant development in East Asian integration — a development that could have a major impact on the political economy of East Asia in general and the process of forming an East Asian regional grouping in particular.