China and ASEAN nations are on the verge of hitting $1 trillion in trade in the next five years.
Despite political and territorial tensions between China and some ASEAN states, Beijing is focused like a laser on beefing up trade and investment with the region. Now, trade between the two are expected to reach $500 billion this year and $1 trillion by 2020.
Some say that key to boosting trade and ties between the two is China’s Silk Road project. In 2013, China’s President Xi Jinping unveiled plans to build the route, which would start with Southeast Asia and eventually connect Central Asia and Europe to China and is likely to help trade tick up at a rapid clip. The Silk Road is an ancient string of land routes that once connected China with the Mediterranean Sea. Those routes faded away over the centuries, through war, decay, the fall of various kingdoms and changing of the guard in a number of countries. But now, for the first time in hundreds of years, the trade routes will be re-established.
In a recent op-ed in the Jakarta Post, China’s Ambassador to ASEAN, Xu Bu, wrote that ASEAN is considered a key starting point for the Silk Road.
Thailand’s junta last year gave the green light for a $23 billion project to link two high speed railways with China’s rail network in the next six years, directly hooking up to rail lines in Kunming, in China’s southern Yunnan province. Eventually, the Chinese southern city of Kunming will link up with Singapore, via 3,000km (1,860m) of high-speed track that will go stretch through neighboring Thailand, Malaysia and Laos.
The project is expected to bring myriad economic benefits to China and ASEAN, and some expect the project to beef up the GDPs of China and the involved nations by nearly $400 billion.
Aside from the Silk Road, China and ASEAN are boosting economic ties in other ways. The ambassador wrote that China and ASEAN could continue to promote the establishment of industrial parks and economic zones in ASEAN countries, spotlighting the China-Singapore Suzhou Industrial Park and Tianjin Eco-city projects as examples of cooperation.
He added that the two would work together on building a network of sea and water transportation, express highways, high-speed railways, aviation and communication optical cables, as well as ratchet up the establishment of the China-ASEAN Port City Cooperation Network. The ambassador contended that China would “actively promote early operation of the Asia Infrastructure Investment Bank so as to resolve financing bottlenecks in the area, especially those in Southeast Asia.”
Last year, China slid past Japan to become Thailand’s no. 1 trading partner. That year also saw the land of smiles reach $63.6 billion in trade with China – a surge of 39 percent compared with 2010 – and both Bangkok and Beijing predict the number will hit U.S. $100 billion in the next five years.
China also plans to upgrade Thailand’s infrastructure, and will slash the day-long train ride from Bangkok to Chiang Mai to around three hours.
China’s trade ties with the Philippines are stable despite recent territorial disputes, with trade between the two climbing to U.S. $14.6 billion in 2013, up from U.S. $12.84 billion in 2012. Chinese tourists, who are now seen throughout Southeast Asia, rank fourth in the number of tourist arrivals, making up nine percent of overall traffic. The Philippines has joined the Silk Road project.
Malaysia, the first Southeast Asian nation to establish formal diplomatic ties with China, has been China’s top ASEAN Trade partner for six years. In 2013, Malaysia formally launched the Malaysia-China Kuantan Industrial Park. The new park will be completed by 2020 and is expected to generate more than $1 billion in annual revenues and provide jobs for more than 5,000 Malay workers.
Thousands of flights between China and ASEAN nations take off and land every week, and the two see 18 million entering and leaving China and ASEAN countries every year, the ambassador added.
While China is Southeast Asia’s largest trading partner, the U.S. has dropped to fourth place, with only $206 billion in total trade with ASEAN last year, compared to China’s $350 billion last year.
Chinese investment is also set to boom. From 1995 to 2003, Chinese companies invested a paltry $631 million in Asean countries. But by 2013, that number surged to $30 billion. While China lags behind the U.S., Europe and Japan on investment in the region, it has the potential to catch up, with Chinese private equity firms looking abroad.
China’s Southeast Asian partners cannot afford to ignore these efforts, argued the Bangkok Post. That is one reason all 10 ASEAN countries signed on as founding members of the China-led Asian Infrastructure Investment Bank, despite US opposition, the Bangkok Post contended.
From all this it is clear — China has big plans in Southeast Asia.
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