Academic journal article China: An International Journal

Competitive or Complementary? China's Role in Trade Cooperation with ASEAN in the 1990s and 2000s

Academic journal article China: An International Journal

Competitive or Complementary? China's Role in Trade Cooperation with ASEAN in the 1990s and 2000s

Article excerpt


The former Premier of China, Mr. Zhu Rongji, officially proposed setting up the China-ASEAN Free Trade Area (CAFTA) at the Fifth China-ASEAN Summit in Brunei in November 2001. Many politicians and scholars from within the region and outside joined the debate: whether or not China was an economic competitor of the Association of the Southeast Asian Nations (ASEAN), given their similarity in economic development generally, and in their trade structure particularly. The debate was heated before and after China's entry into the World Trade Organization (WTO). Most researchers agreed that Sino-ASEAN trade relations were not only competitive, but also mutually complementary. (1) Yet, some argued that the relations were more competitive than mutually complementary. (2) One commented, "the export competition between China and ASEAN will be chronic". (3) On the other hand, others argued that the mutual complementarity was much more than competition. (4) Some researchers argued that trade relations were more mutually complementary with China in certain industries and with certain countries, and more competitive between China and countries with similar industrial structures. (5)

According to John Ravenhill, when the CAFTA was established, "ASEAN [was] benefiting from China's new role as an assembly plant for global markets and its consequent demand for components". (6) Based on an Asian Development Bank (ADB) report in 2003, some Asian countries (including some members of ASEAN) "voiced their concerns over the consequences of the rapid development of certain industries in the PRC (China), such as textiles and electronics". (7) Researchers in the World Bank also expressed their concerns over the intensified competition, particularly in the textiles sector. They asserted that after entry into the WTO, China would become a formidable competitor in textile and apparel exports to developed countries, though other developing countries (including the developing members of ASEAN) had comparative advantage. (8) In an interview with a Chinese journalist on 8 October 2009, Dr. Surin Pistuwan, Secretary General of the ASEAN Secretariat, summarised Sino-ASEAN economic relations in a simple sentence: "the two sides [are] mutually complementary in terms of economy". (9)

The latest studies on the formation and transformation of intra-industry trade in relation to the FTA provide an accurate picture of Sino-ASEAN trade. However, the comparative advantage thesis is not outdated; on the contrary, it highlights the trade competition between China and ASEAN in third markets. Part of the reason is that although "intra-industry trade took up a large portion of China-ASEAN trade (reflected by the dominance of trade in material, parts and components), ... China and many ASEAN members continued to compete in exports to advanced countries, such as the [United States] and the [European Union]". (10) In short, there is currently no agreement on this "competitive/complimentary" problem in academic and political fields.

In order to clarify the nature of the problem and identify China's role in trade cooperation with ASEAN, this article analyses Sino-ASEAN trade relations in the 1990s and 2000s and measures their comparative advantage in the Standard International Trade Code (SITC) commodity categories of S1-6 (manufactured goods), S1-7 (machinery and transport equipment) and S1-0 (food and live animals, which includes most agricultural products) with the revealed comparative advantage (RCA) index. (11)

In the next section, in order to set up a well-founded basis for analysis of the bilateral trade relationship between China and ASEAN, the data on trade between China and ASEAN before and after 2000 are compared in various perspectives. The third section addresses the problem of whether China competed with ASEAN in trade, and identifies China's role as a rising complementary partner of ASEAN. The final section concludes with the prospects for regional economic integration of China and ASEAN. …

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