China and ASEAN strengthen economic ties

In the last two decades, economic ties between China and ASEAN have grown considerably. China and ASEAN saw their trade surge to more than 290-billion US dollars in 2010 a 37-fold increase from that of 1991. CCTV reporter Ai Yang talks to one expert on South East Asia and finds out how.

In 2011, ASEAN replaced Japan to become China's third largest trading partner, while China remained the group's largest trading partner for the third consecutive year. Southeast Asia has become many Chinese enterprises first choice of investment destination.

Xu Liping, Senior Research Fellow of Chinese Academy of Social Sciences, said, "In the last decade bilateral trade between China and ASEAN surged by an average of 20 percent every year. This momentum is unparalleled in any other region. In the very beginning, trading activities were limited, but recent government policies have accelerated the pace of cooperation."

In 2010, a free trade area was set up between China and ASEAN. Bilateral trade ballooned after the launch, as it has reduced the average tariff on goods traded between the partners to close to zero. The agreement currently only includes the six original members of ASEAN, and is the largest free trade area in terms of population in the world. The other four ASEAN countries will join the agreement in 2015 and enjoy zero tariffs on more than 90 percent of their trading goods.

"This regional cooperation serves as a model for East Asia. More people will benefit from it when the area covers the entire ASEAN. For example tropical fruits and other agricultural products from less developed ASEAN countries will flow into the vast Chinese market more easily, and can be bought at cheaper prices due to tariffs reduction." Xu said.

Nevertheless, the economic relationship between China and ASEAN still faces many obstacles. For one, there is fear that free trade goods from China will put pressure on many small local enterprises in South East Asia. Xu says in order to balance trade, China is also transferring technology and investing more capital in the bloc. In 2010, Chinese mainland companies set up more than 2000 business ventures in ASEAN, creating more than 60 thousand local jobs.