Chinese President Xi Jinping just concluded his rounds in South Asia, with recent visits to India, Sri Lanka and Maldives to build on bilateral ties as well as to deepen economic cooperation. Back home, China also unveiled its economic plans for Asia through forums like the 18th International Fair for Investment and Trade and the 11th ASEAN-China Business & Investment Summit.
These announcements have helped make clear China’s proposed two-plus-seven cooperative framework with ASEAN, which was first announced at the ASEAN-China Summit in Brunei in 2013. The framework comprises a “two-point political consensus” and a “seven-point proposals” for deeper cooperation.
Proposals for deeper economic ties
Out of the seven proposals, four have direct economic impact on ASEAN. One proposal states China’s ambition to upgrade the ASEAN-China free trade area and increase bilateral trade to US$500 billion by 2015, US$1 trillion by 2020 and two-way investment of $150 billion within the next eight years. While specifics are yet to be confirmed, Chinese initiatives such as the new Yunnan-Guangxi border pilot zone will help to expand yuan currency settlements in cross-border trade with ASEAN. Some ASEAN members have responded positively, such as Thailand and Malaysia. Both countries have plans to set up yuan clearing centres.
To support its vision of a 21st Century Maritime Silk Road, China established a US$1.6 billion fund to build ports in Southeast Asian, as well as in coastal countries along the Indian Ocean. Infrastructure projects aimed at boosting regional connectivity will also get an injection of Chinese funds from the proposed China-led Asian Infrastructure Investment Bank (AIIB).
Geopolitics still at play
While economic cooperation with China is welcomed by most ASEAN members, competing territorial claims may complicate economic cooperation. For example, expansion in trade and maritime cooperation will depend on the developments of South China Sea disputes, and China’s ability to cultivate political and strategic trust with ASEAN and its individual members.
Clearly, China has the capacity to channel billions of dollars to boost development and economic growth in ASEAN countries and the wider region. But, Chinese plans for economic cooperation may risk being overshadowed by regional geopolitics and the way it manages its territorial disputes.
Sources:
Zhang Gaoli’s speech at China-ASEAN Expo, Business and Investment Summit [Xinhua, 17 Sep 2014]
Silk Road initiatives take the spotlight as trade fair opens [China Daily, 10 Sep 2014]
Photo Credit: Wikimedia Commons
