China and ASEAN Finalizing New Free Trade Agreement to Boost Trade Cooperation

China and ASEAN Close to Finalizing a New Free Trade Agreement

China aims to solidify its trade partnership with Southeast Asia through an updated version of a bilateral free trade agreement. This agreement, set to be signed next year, reflects nearly two years of negotiations and highlights nine new critical areas, including the digital economy, green economy, and supply chain connectivity.

Key Highlights of the Agreement

• Free Trade Cooperation: Integration of digital infrastructure and electronic payment systems.
• New Energy Initiatives: Focus on trade and investment cooperation in green energy.
• Supply Chain Connectivity: Strategies for free flow of key products.

China’s economic strategy involves enhancing economic ties with ASEAN countries, particularly given reduced trade with the US and stagnant relations with the EU. Christopher Tang, a professor at UCLA, emphasizes that engaging ASEAN will facilitate more transactions in the Chinese yuan, aiming to diminish US dollar dominance.

Challenges and Concerns

Despite optimism about trade opportunities, there are evident apprehensions among ASEAN nations regarding dependency on Chinese goods. Concerns over overcapacity have prompted Indonesia to take action against the cross-border e-commerce platform Temu. Thailand, too, is enforcing taxes on foreign products to protect local businesses.

Inclusion of provisions for competition and consumer protection in the new agreement indicates an acknowledgment of these challenges. As China looks to enhance its influence in Southeast Asia, the balance between cooperation and sustainability remains a critical focus.