South China Sea arbitration not the cause for drops in trade with ASEAN countries

By Hu Weijia Source:Global Times Published: 2016/7/22 0:13:27

A cooling in economic exchanges between China and ASEAN countries has attracted intense attention following the South China Sea arbitration award issued last week.

According to official data, China saw its overall trade with ASEAN drop 8.1 percent in the first half of the year. Additionally, direct foreign investment into the Chinese mainland from ASEAN members dropped 57 percent in June from the previous year.

Those figures are a sharp contrast to the growth in bilateral trade and investment that has occurred in past  years. Data from the Ministry of Commerce shows that China's total trade with ASEAN members rose from a mere $7.96 billion in 1991 to $472.16 billion in 2015, an average annual increase of 18.5 percent.

The question that remains is whether there will be a new script for China and ASEAN in economic cooperation and geopolitics after the South China Sea arbitration. Many people will be searching for answers as Chinese Foreign Minister Wang Yi attends a series of meetings of foreign ministers from July 24 to 27 in Laos, a trip that was confirmed on Thursday.

It is a mistake to attribute this cooling in Sino-ASEAN economic ties solely as a result of the escalation of the South China Sea dispute, but new signals in the relations do deserve attention. China still has comprehensive advantages for attracting foreign investment, but the nation is increasingly placing emphasis on attracting investment in high-tech industries, creating more connections with the US and EU countries.

However, frequent economic exchanges are the foundation for the sustainability of Sino-ASEAN relations. Likely, it is because of the stability of these economic ties with China that some countries have adopted a cautious and balanced stance toward the South China Sea dispute, and have not taken sides with the Philippines.

Despite irrational calls from  Chinese netizens for boycotts against products from ASEAN countries, China should focus on strengthening its economic relations on the basis of the mutual benefits of trade cooperation.

China and ASEAN have many chances to improves cooperation. The 13th China-ASEAN Expo will kick off in Nanning, South China's Guangxi Zhuang Autonomous Region, in September and can serve as a platform to promote bilateral trade and investment. China should explore possible cooperation in promoting the sale of made-in-ASEAN products through e-commerce platforms in the Chinese market.

There is great potential for collaboration in the energy, agriculture, and production capacity sectors. Already the two sides have established multiple frameworks to promote regional development, but considering the different development levels among the 10-member bloc, China may need to enhance bilateral cooperation with individual nations and put more focus on sub-zones, like the Lancang-Mekong River subregion, to make cooperation more targeted and flexible.

The author is a reporter with the Global Times.

Posted in: Eye on The Economy

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