Overview
ASEAN-China Dialogue Relations commenced when H.E. Qian Qichen, the then Foreign Minister of the People’s Republic of China, attended the opening session of the 24th ASEAN Ministerial Meeting in July 1991 in Kuala Lumpur as a guest of the Malaysian Government. He expressed China’s keen interest to cooperate with ASEAN for mutual benefit. Subsequently, China was accorded full Dialogue Partner status at the 29th AMM in July 1996 in Jakarta, Indonesia.
China has retained its position as ASEAN’s largest trading partner since 2009. Trade between ASEAN and China has more than doubled since 2010, from USD 235.5 billion to USD 507.9billion in 2019 (18% of ASEAN’s total) and almost quadrupled since the entry into force of the ASEAN-China Trade in Goods Agreement in 2005. ASEAN’s exports to China grew at an average annual rate of 10.4% from 2010 to 2019 as compared to 12.5% for ASEAN’s import from China during the same period. ASEAN’s trade deficit with China increased from USD 10.4 billion in 2010 to USD 102.9 billion in 2019.
Based on preliminary ASEAN data, FDI flows from China to ASEAN reached USD 9.1 billion in 2019, accounting for 5.7% of total FDI flows to the region. which placed China as the fourth largest source of FDI among ASEAN’s Dialogue Partners. According to statistics from the Chinese side, despite the COVID-19 pandemic, the trade volume between ASEAN and China during first half of 2020 increased by 2.2% against the downtrend where ASEAN leaps to become China’s largest trading partner for the first time, making ASEAN and China each other’s top trading partner.
China has retained its position as ASEAN’s largest trading partner since 2009. Trade between ASEAN and China has more than doubled since 2010, from USD 235.5 billion to USD 507.9billion in 2019 (18% of ASEAN’s total) and almost quadrupled since the entry into force of the ASEAN-China Trade in Goods Agreement in 2005. ASEAN’s exports to China grew at an average annual rate of 10.4% from 2010 to 2019 as compared to 12.5% for ASEAN’s import from China during the same period. ASEAN’s trade deficit with China increased from USD 10.4 billion in 2010 to USD 102.9 billion in 2019.
Based on preliminary ASEAN data, FDI flows from China to ASEAN reached USD 9.1 billion in 2019, accounting for 5.7% of total FDI flows to the region. which placed China as the fourth largest source of FDI among ASEAN’s Dialogue Partners. According to statistics from the Chinese side, despite the COVID-19 pandemic, the trade volume between ASEAN and China during first half of 2020 increased by 2.2% against the downtrend where ASEAN leaps to become China’s largest trading partner for the first time, making ASEAN and China each other’s top trading partner.
Priority Areas of Cooperation
The ASEAN-China Free Trade Area (ACFTA) was initiated with the signing of the Framework Agreement on Comprehensive Economic Cooperation in 2002,167 followed by the ASEAN-China Trade in Goods Agreement in 2004,168 ASEAN-China Agreement on Trade in Services in 2007, and ASEAN-China Investment Agreement in 2009. The Framework Agreement entered into force on 1 July 2003 and subsequently amended in 2003, 2006, 2012, and 2015.
The ASEAN-China Framework Agreement featured an Early Harvest Programme. Implemented on 1 January 2004, the Programme saw the elimination of tariff lines for some agricultural products for all the parties to the FTA. Since its entry into force in 2005, The ASEAN-China Trade in Goods Agreement has been revised to include, among others, provisions on TBT and SPS Measures. In terms of market access, tariff elimination has now been completed for more than 91.9% of total tariff lines for the ASEAN-6 and China. As for the remaining AMS, tariff elimination is currently being implemented in accordance with the timelines provided for in the agreement.
The ASEAN-China Agreement on Trade in Services was signed in 2007, with the subsequent Protocol to Implement the Second Package of Specific Commitments under the Trade in Services signed in 2011. ASEAN and China also signed the Agreement on Investment in 2009.
Ten years after the Framework Agreement, the decision to upgrade the ACFTA was formalised in 2013. Leaders welcomed the initiative to enhance the ACFTA through, among others, improving market conditions and trade balance between both sides, as well as expanding the scope and coverage of the Framework Agreement. The ‘Protocol to Amend the Framework Agreement on Comprehensive Economic Cooperation and Certain Agreements thereunder between ASEAN and the People’s Republic of China’ (ACFTA Upgrading Protocol) was signed on 21 November 2015 in Kuala Lumpur on the sidelines of the 27th ASEAN Summit and Related Summits.
The ACFTA Upgrading Protocol entered into force on 1 July 2016. The Protocol provides amendments to the text of the Rules of origin (ROO) Chapter and incorporates a section on Customs Procedures and Trade Facilitation to the ASEAN-China Trade in Goods Agreement. This includes a third package of specific commitments under the Agreement on Trade in Services, adds provisions on the promotion and facilitation of investment in the Investment Agreement, and introduces additional rules and areas of coverage for Economic and Technical Cooperation under the Framework Agreement. The Protocol also provides a Future Work Programme for unfinished elements, namely on the further liberalisation of trade in goods, review of product-specific rules, and the promotion and protection of investment.
The ACFTA Upgrading Protocol was fully implemented with the implementation of the revised ACFTA Rules of Origin under the Protocol in August 2019.
Economic cooperation was embedded in various provisions under the ACFTA Framework Agreement. Subsequently, as part of the upgrading, parties agreed to have a standalone Chapter on Economic and Technical Cooperation under the Protocol to amend the ACFTA Framework Agreement and related agreements (2015). China is providing an ASEAN-China Grant to support the implementation of the ACFTA
The ASEAN-China Framework Agreement featured an Early Harvest Programme. Implemented on 1 January 2004, the Programme saw the elimination of tariff lines for some agricultural products for all the parties to the FTA. Since its entry into force in 2005, The ASEAN-China Trade in Goods Agreement has been revised to include, among others, provisions on TBT and SPS Measures. In terms of market access, tariff elimination has now been completed for more than 91.9% of total tariff lines for the ASEAN-6 and China. As for the remaining AMS, tariff elimination is currently being implemented in accordance with the timelines provided for in the agreement.
The ASEAN-China Agreement on Trade in Services was signed in 2007, with the subsequent Protocol to Implement the Second Package of Specific Commitments under the Trade in Services signed in 2011. ASEAN and China also signed the Agreement on Investment in 2009.
Ten years after the Framework Agreement, the decision to upgrade the ACFTA was formalised in 2013. Leaders welcomed the initiative to enhance the ACFTA through, among others, improving market conditions and trade balance between both sides, as well as expanding the scope and coverage of the Framework Agreement. The ‘Protocol to Amend the Framework Agreement on Comprehensive Economic Cooperation and Certain Agreements thereunder between ASEAN and the People’s Republic of China’ (ACFTA Upgrading Protocol) was signed on 21 November 2015 in Kuala Lumpur on the sidelines of the 27th ASEAN Summit and Related Summits.
The ACFTA Upgrading Protocol entered into force on 1 July 2016. The Protocol provides amendments to the text of the Rules of origin (ROO) Chapter and incorporates a section on Customs Procedures and Trade Facilitation to the ASEAN-China Trade in Goods Agreement. This includes a third package of specific commitments under the Agreement on Trade in Services, adds provisions on the promotion and facilitation of investment in the Investment Agreement, and introduces additional rules and areas of coverage for Economic and Technical Cooperation under the Framework Agreement. The Protocol also provides a Future Work Programme for unfinished elements, namely on the further liberalisation of trade in goods, review of product-specific rules, and the promotion and protection of investment.
The ACFTA Upgrading Protocol was fully implemented with the implementation of the revised ACFTA Rules of Origin under the Protocol in August 2019.
Economic cooperation was embedded in various provisions under the ACFTA Framework Agreement. Subsequently, as part of the upgrading, parties agreed to have a standalone Chapter on Economic and Technical Cooperation under the Protocol to amend the ACFTA Framework Agreement and related agreements (2015). China is providing an ASEAN-China Grant to support the implementation of the ACFTA
Major Sectoral Bodies/Committees
- The primary element of the institutional structure is the ASEAN-China FTA Joint Committee (ACFTA-JC), which reports regularly to the consultations of the ASEAN Economic Ministers and China’s Minister of Commerce (MOFCOM), or also known as AEM-MOFCOM Consultations, through the meetings of their Senior Economic Officials (known as SEOM-MOFCOM Consultations).
- A number of subsidiary bodies to the ACFTA-JC were established to support the implementation of specific issues.
Key Documents
Agreements
- ASEAN-China Framework Agreement on Comprehensive Economic Co-Operation (2002) and its Annexes
- Protocol to Amend the ASEAN-China Framework Agreement on Comprehensive Economic Co-Operation (2003)
- Second Protocol to Amend the ASEAN-China Framework Agreement on Comprehensive Economic Co-operation (2006)
- Third Protocol to Amend the ASEAN-China Framework Agreement on Comprehensive Economic Co-Operation (2012)
- Protocol to the ASEAN-China Framework Agreement on Comprehensive Economic Co-operation and Certain Agreements thereunder (2015)
- ASEAN-China Trade in Goods Agreement (2004)
- ASEAN-China Trade in Services Agreement (2007)
- ASEAN-China Investment Agreement (2009)
- ASEAN-China Dispute Settlement Mechanism Agreement (2004)
- Protocol to further Upgrade the Framework Agreement on Comprehensive Economic Co-Operation and Certain Agreements Thereunder Between the Association of Southeast Asian Nations and the People’s Republic of China (ACFTA 3.0 Upgrade Protocol)
Joint Media Statements
- 19th AEM-MOFCOM CONSULTATIONS, 27 August 2020, Video Conference
- ASEAN-China Economic Ministers’ Joint Statement on Combating the Coronavirus Disease (COVID-19) and Enhancing ACFTA Cooperation, 29 May 2020
- 18th AEM-MOFCOM CONSULTATIONS, 9 September 2019, Bangkok, Thailand
- 17th AEM-MOFCOM CONSULTATIONS, 30 August 2018, Singapore
- 16th AEM-MOFCOM CONSULTATIONS, 8 September 2017, Pasay City, Philippines
- 15th AEM-MOFCOM CONSULTATIONS, 4 August 2016, Vientiane, Lao PDR
- 14th AEM-MOFCOM CONSULTATIONS, 23 August 2015, Kuala Lumpur, Malaysia
- 13th AEM-MOFCOM CONSULTATIONS, 26 August 2014, Nay Pyi Taw, Myanmar
- 12th AEM-MOFCOM CONSULTATIONS, 20 August 2013, Bandar Seri Begawan, Brunei Darussalam
- 11th AEM-MOFCOM CONSULTATIONS, 29 August 2012, Siem Reap, Cambodia
- 10th AEM-MOFCOM CONSULTATIONS, 12 August 2011, Manado, Indonesia
- 9th AEM-MOFCOM CONSULTATIONS, 26 August 2010, Da Nang, Viet Nam,
- 8th AEM-MOFCOM CONSULTATIONS, 15 August 2009, Bangkok, Thailand
- 7th AEM-MOFCOM CONSULTATIONS, 27 August 2008, Singapore
- 6th AEM-MOFCOM CONSULTATIONS, 25 August 2007, Makati City, Philippines
- 5th AEM-MOFCOM CONSULTATIONS
- Joint Media Statement
- 4th AEM-MOFCOM CONSULTATIONS, 29 September 2005, Vientiane, Lao PDR
- 3rd AEM-MOFCOM CONSULTATIONS
- 2nd AEM-MOFCOM CONSULTATIONS, 3 September 2003, Phnom Penh, Cambodia
- 1st AEM-MOFCOM CONSULTATIONS, 13 September 2002, Bandar Seri Begawan, Brunei Darussalam
