News from Indonesia also confirms that, though its textile and garment market still feels pressure after the establishment of the China-ASEAN Free Trade Area, it has seen a remarkable increase in exports and rosy prospects seem natural. In the first quarter of 2010 Indonesia’s textile and garment exports amounted to US $1.7 billion, an increase of 25 percent over the same period in 2009.

An Asian Development Bank report reveals that most export enterprises in the Philippines view the China-ASEAN FTA positively and look forward to benefiting from its preferential policies while exploring new markets overseas. This indicates that Philippine industries understand the Chinese market presents opportunities rather than challenges.

The facts alone indicate that Chinese enterprises have developed beyond the stage of labor-intensive manufacturing. Recent Chinese acquisitions of overseas automobile, aircraft, chemical and heavy-machinery businesses reveal that China’s manufacturing sector is becoming more technology-intensive and that its rise in the world’s manufacturing chain causes no competition with ASEAN manufacturers. Lü Yusheng, president of the Guangxi Academy of Social Sciences, says: “China imports mostly primary products, spares and parts from ASEAN countries, which it processes and assembles for export to other countries. If Chinese enterprises want a greater profit margin, they can set up manufacturing facilities in ASEAN countries. By marrying Chinese capital and technology with the raw material and labor advantages of ASEAN countries, they can produce high-quality, low-cost products that they may either market in China or export to other countries.” According to Lü, China’s non-financial direct investment in ASEAN amounted to US $1.22 billion in the first half of 2010, an increase of 125.7 percent over the same period of 2009. ASEAN has become a major destination for Chinese enterprises that are “venturing abroad.”

Follow the Money

Economic cooperation boosts political trust. On the basis of their economic cooperation, China and ASEAN have established a strategic partnership that is sure to promote closer and more stable political ties in East Asia.

With the expansion of their trade contacts, China and ASEAN countries have stepped up exchanges and communications on the non-official level. This will also help enhance mutual understanding and trust between the two sides.

Increased trade is only one aspect of China-ASEAN relations; China has also worked hard to improve conditions for development in ASEAN countries. Last year a US $800 million low-interest loan was provided to Malaysia for the construction of a 23-kilometer cross-ocean bridge. China has also helped build bridges and roads in Cambodia, Laos, Myanmar and Indonesia. H. E. Tramivtek, Cambodian minister for public works and transport, says: “For a long time now the Chinese government has given special assistance in bridge and road construction, helping us build 1,500 kilometers of highways and five bridges. It has also provided generous help with other types of infrastructure, and built railways that connect us right to the borders of Thailand and Laos. China has given us a hand in seaport construction too, enlarging the capacity of the Phnom Penh harbor, which has greatly facilitated transport between Phnom Penh and Ho Chi Minh City.”

Khemmani Pholsena, Lao vice minister of industry and commerce, believes that the establishment of the China-ASEAN Free Trade Area has laid a solid foundation for stability and prosperity in the Asia-Pacific Region. She hopes that China and ASEAN members will continue to follow principles of equality and mutual benefit, enhance understanding and trust on both sides, accelerate the process of sub-regional cooperation, and work together to drive China-ASEAN integration for the benefit of their peoples.

Do Tien Sam, director of the Institute of Chinese Studies under the Vietnam Academy of Social Sciences, declares that mutual trust between ASEAN and China is increasing by the day, as is cooperation in political, economic and cultural realms. In his view, this development is conducive not only to their respective development, but also to the peace, stability and development of Asia and the world.