Innovation – An Inexhaustible Motive Force of China-ASEAN Economic cooperation and trade
China and ASEAN countries are linked by common mountains and rivers that are closely related as lips and teeth, enjoying a history of nearly one thousand years of and friendship and trading. Ever since the establishment of the ASEAN-China dialogue relations in 1991, the trade and economic cooperation between China and ASEAN has been developing quickly. The trade volume of both sides has grown well over 15 times, with annual average growth rate of about 20%. Especially in the recent five years since the construction of CAFTA, the cooperative relation between China and ASEAN has been greatly promoted and continuously emerged new development and changes. China has become the fourth largest trade partner of ASEAN, and vice versa for China. There has never been such a time when the economic and trade relations between China and ASEAN are so close and active as in the golden age.
The brilliant achievements of the economic cooperation and trade between China and ASEAN are the results of the common demand, mutual trust, mutual efforts and mutual selection, as well as the results of unceasing innovation and creation. As pointed out by Premier Wen Jiabao at the ninth ASEAN and Chinese leaders meeting, “innovation is an inexhaustible motive force for the development of China-ASEAN relations”. Facing the daily different regional and international circumstances, we can advance with the times and grasp the development trend in promoting mutual development and retaining the dynamic vitality of relations through unceasingly proposing new contents and methods for cooperation.
I. Forging ahead with innovation and close cooperation
The remarkable achievements in economic cooperation and trade between China and ASEAN made during the past fifteen years, especially in the recent five years, can be attributed to the innovated concept, the mechanism and the mode of cooperation.
(I) Organizing China-ASEAN Free Trade Area.
Organizing the free trade area is a creative measure with the most significance for China-ASEAN economic cooperation and trade. It is an important decision for China and ASEAN to cope with the economic globalization and regional economic integration. It is also the vivid embodiment of the right choice of China and ASEAN for their future development and the inevitable outcome of the economic cooperation and trade between China and ASEAN member countries in recent years. In November 2002, the ASEAN and Chinese leaders meeting held in Phnom Penh made remarkable result: Framework Agreement on ASEAN-China Comprehensive Economic Cooperation was officially signed, which initiated the program of constructing CAFTA. CAFTA is the first free trade area jointly built with outsiders both of China and ASEAN. It is also called as the “third economic entity of the world in future” right after the North-American Free Trade Area and EU. Compared with other free trade areas of the world, CAFTA has the following characteristics.
1. CAFTA is the most populated free trade area in the world, covering nearly 30% of the world population and 1.8 billion consumers, indicating great market potentials.
2. CAFTA is the first free trade area that is jointly constructed by a large country with a regional international organization. It has a total GDP of 2000 billion U.S Dollars and a total trade volume of 1.23 billion U.S dollars that respectively account for about 10% of the totals of the world. It also processes approximately 40% of the world foreign currency reserve and thus will become one of the important post of the global economy.
3. CAFTA is the largest free trade area that solely consists of developing countries of the world.
4. CAFTA has completed the process from proposal to the agreement within a relatively short time. At the fourth ASEAN and Chinese leaders meeting in 2000, China made proposal of constructing CAFTA. At the fifth ASEAN and Chinese leaders meeting in 2001, both parties reached common understanding of constructing CAFTA. At the sixth ASEAN and Chinese leaders meeting in 2002, both parties entered the basic document for establishment of CAFTA – Framework Agreement on ASEAN-China Comprehensive Economic Cooperation, scheduling to complete the establishment of CAFTA by 2010. This marked the official start of the process of construction CAFTA. From the proposal to the signing of agreement for CAFTA, it was only two years. As to the most populous free trade area jointly constructed by 11 countries, this is rare among many other free trade areas of the world.
(II) China-ASEAN Expo.
With the quick initialization of the construction of CAFTA, China-ASEAN Expo rises to the surface. This is another innovative measure in the economic cooperation and trade between China and ASEAN.
In order to promote the cooperation of mutual benefit among the enterprises both of China and ASEAN and facilitate the construction of CAFTA, at the seventh ASEAN and Chinese leaders meeting in 2004, Premier Wen Jiabao proposed to hold annual China-ASEAN Expo and China-ASEAN Business & Investment Summit in Nanning. This proposal was welcome and supported by the leaders of ASEAN countries and the ASEAN Secretariat. The Expo is jointly sponsored by the governmental commercial departments of 11 countries. Both sides are in the opinion that the Expo is a grand gathering for economic cooperation and trade and a multi-lateral international activity. It can promote mutual understanding and embody the principle and purpose of China in developing friendly neighborliness and the strategic partnership for peace and prosperity. It will also deepen the regional economic cooperation between China and ASEAN countries.
(III) The innovation in the political cooperation between China and ASEAN has provided with important conditions for the development of economic cooperation and trade of both sides.
The China-ASEAN dialogue relations developed very quickly ever since its establishment in 1991. In the past 15 years, the political relations were harmonious, and some innovative measures were constantly proposed, serving as the strong safeguard for the stable economic cooperation and trade.
In 2002, in Phnom Penh, China and ASEAN jointly signed Joint Declaration of ASEAN and China Cooperation in the Field of Non-traditional Security Issues and Declaration on the Conduct of Parties in the South China Sea (DOC). Such has effectively solved the problem of South China Sea, help establish the stable and peaceful region, as well as create favorable regional environment of mutual development.
In 2003, as the dialogue partner of ASEAN, China made its accession to the Treaty of Amity and Cooperation in Southeast Asia. At the same time, both sides signed the Joint Declaration on ASEAN-China Strategic Partnership for Peace and Prosperity. This is the first strategic partner relation of China with a regional international organization. It is also the first strategic partner relation of ASEAN as a whole with a country.
(IV) Innovatively develop the key cooperating fields between China and ASEAN.
In the recent 15 years, the leaders of China and ASEAN countries have proposed many new conception and suggestions for cooperation. At the fifth ASEAN and Chinese leaders meeting held in Brunei on November 6, 2001, both sides determined five areas of cooperation, respectively agriculture, information industry, mutual investment, development of human resources and GMS development. At the ninth ASEAN and Chinese leaders meeting in 2005, the leaders of all participating countries discussed to enlarge the cooperating areas from the existing five areas to ten areas, with the additional areas of energy resources, transportation, culture, public health and tourism. Since the ten key cooperating areas are of the great concerns to both sides, the cooperating relations between both sides are further deepened in a planned and selective way along with the overall development.
In order to strengthen the mutual exchanges and cooperation, China and nine ASEAN member countries have respectively established the committee of economic cooperation and trade. In addition, both sides have established the cooperating mechanism of ministerial conference level for eight areas including energy resources, agricultural and transportation etc. This is an innovative undertaking in the cooperating mechanism of both sides.
(V) Vigorously promote the sub-regional development and cooperation between China and ASEAN
Both ASEAN and Chinese leaders greatly encourage the further sub-regional development which includes the establishment of economic cooperation zones in the following regions: the Southwest China, the East ASEAN Growth Area (BIMP-EAGA), the Three River Areas, the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT), the Greater Mekong Sub-region (GMS), including the development of Singapore-Kunming Rail Link and ASEAN Great Mekong Development with involvement of other places, with the purpose of building the sub-regional economic cooperation into a strong point in the China-ASEAN economic cooperation and trade.
II. Take positive action and realize innovation
Innovation is a process of decision making with the premises of having potential interests. Without potential interests, no innovation is needed. In the past 15 years, the means for economic cooperation and trade between China and ASEAN keep innovating. With the support of the leaders of both sides, these new mechanism and measures have been implemented and transferred to the solid economic benefits that offer to China, ASEAN countries and even the whole East Asia.
(I) Construction of CAFTA has entered the substantive operating stage.
Construction of CAFTA has led the relations of economic cooperation and trade between China and ASEAN into a new stage with breakthrough development. After the official initialization of FTA construction, both China and ASEAN made great efforts in accelerating such process. In October 2003, the “Early Harvest Program” between China and Thailand was launched. In January 2004, this Program was implemented extensively, the markets of 500 kinds of agricultural products were opened mutually between China and ASEAN. At the eighth ASEAN and Chinese leaders meeting in 2004, both sides signed two important documents relating to the FTA, respectively Agreement on Trade in Goods under Framework Agreement on ASEAN-China Comprehensive Economic Cooperation and Agreement on Dispute Settlement Mechanism of China-ASEAN Free Trade Area. In July 2005, these two agreements became effective, and accordingly over 7000 kinds of products both of China and ASEAN start to cut tariff gradually each year. According to the plan of CAFTA construction, by 2010, the tariff for most of the products between China and the six original ASEAN member countries will become zero; by 2015, the tariff for most of the products between China and the four new ASEAN member countries will become zero.
Currently, the CAFTA construction has entered a full-scale and substantive operating stage. In three years, the mutually-opened market between China and ASEAN will bring about solid benefits to the consumers of the FTA with mutual exemption of tariff for 90% of goods. An unified market consisting of 11 countries is under construction, and which will overwrite the global economic structure.
(II) Fruitful achievements of China-ASEAN Expo
Ever since November 2004, China-ASEAN Expo has been held successfully for three times, achieving a bumper harvest both in commodity trading and investment cooperation. In 2004, the first China-ASEAN Expo jointly sponsored by China Ministry of Commerce, the governmental commercial departments of ten ASEAN member countries and ASEAN Secretariat was held in Nanning. The scale of the second China-ASEAN Expo in 2005 was bigger. In October this year, the third China-ASEAN Expo and the 15th Anniversary of ASEAN-China Dialogue Relations Summit were held at the same time, serving as the exhibition of the achievements of the cooperation between China and ASEAN in the past 15 years.
The Expo will insist on (i) the integration of import and export by giving stress on import and serving as the bridge for ASEAN products to enter Chinese markets; (ii) the integration of investment and business introduction by giving stress on “going out” and serving as the platform for Chinese enterprises to invest in ASEAN; and (iii) the integration of goods trade and service trade by taking tourism and transfer of innovated technical results of medium and small-size enterprises as the critical point to cultivate new growth point for the China-ASEAN economic cooperation and trade. China-ASEAN Expo will play an active role in promoting the economic cooperation and trade among the eleven countries and create numerous business opportunities to all.
(III) Positive interaction of political and economic cooperation between China and ASEAN
The Joint Declaration on ASEAN-China Strategic Partnership for Peace and Prosperity jointly approved by the leaders of ASEAN and China in the 7th leaders meeting in 2003 marked that the dialogue relation between China and ASEAN had reached a new level. Subsequently in November 2004, Vientiane Action Program was approved both by leaders of China and ASEAN countries in the 8th ASEAN and Chinese leaders meeting, and which has planned the projects and objectives of cooperation during the period of 2005-2010 for practical implementation of the Declaration.
In recent years, both sides are taking the initiatives in discussing the issues for implementation of Declaration on the Conduct of Parties in the South China Sea. After that, the Joint Working Group of DOC was established with the purpose of studying and proposing how to materialize the terms and conditions of DOC into the cooperative activities with mutual understanding and mutual trust. The Joint Working Group held two meetings respectively in Philippine in August 2005 and in Sanya of China in February 2006.
The year of 2006 is the 15th anniversary of ASEAN-China Dialogue Relations. It was named as the China-ASEAN Friendship Year. On October 30, Premier Wen Jiabao and the leaders of ten ASEAN member countries gathered in Nanning and participated in the 15th Anniversary of ASEAN-China Dialogue Relations Summit. This Summit was the first time when the leaders of ASEAN member countries gathered in China in the form of “10+1” (ten ASEAN countries plus China”, indicating a symbol that ASEAN countries attach great importance to the promotion of relation with China. It also marked that the China-ASEAN cooperation had entered a new stage and brought a milestone significance to the history of development of relations of both sides. The solidification and development of the political relations between China and ASEAN have provided with the most favorable conditions and cooperating opportunities for the mutual economic cooperation and trade. Such will be beneficial to the deepening of economic cooperation and trade of both sides, and help to realize in advance the target of 200 billion U.S dollars of bilateral trade volume before 2010.
III. Stick to innovation and keep vitalizing
As pointed out by Premier Wen Jiabao, innovation is an inexhaustible motive force for the development of China-ASEAN relations. In the past 15 years, we can advance with the promotion of mutual development and retain the dynamic vitality of relations through unceasingly proposing new contents and methods for cooperation. The holding of the 15th anniversary of ASEAN-China Dialogue Relations Summit marks the beginning of a second 15 years of ASEAN-China dialogue relations. This 15 years is also the time when China will be on full scale in constructing the well-off society, when ASEAN will expedite the construction of ASEAN Community, as well as when the relations between China and ASEAN will undergo great development. In the new stages of the future, we should continue to stick to innovation and strengthen the vitality for cooperation.
(I) Government: Stick to the principle of equality, mutual benefits and unanimity.
As pointed out by Premier Wen Jiabao at the ninth ASEAN and Chinese leaders meeting, “Equality and mutual benefits are the primary premises for development of China-ASEAN relations, while unanimity is the major means for China-ASEAN cooperation”. The essence of the daily deepening of the China-ASEAN relations lies in the facts that: we should stick to equality, noninterference in each other's internal affairs, mutual respects for the respective ways of developments; we should stick to frank dialogue, mutual trust and proper settlement of the problems arising from the bilateral relations; we should stick to mutual benefits and win-win footing and enable the maximum share of the results of cooperation. We can learn from the experiences in the China-ASEAN economic cooperation and trade that, only sticking to the principle of equality and unanimity can we enhance the confidence in mutual cooperation and find out the effective cooperating means to settle any new problems. Only on this basis can a better and more effective innovation can be achieved.
(II) Non-governmental organization: Fully exert the function.
The realization of the innovative targets should gain the supports from the stakeholders from all circles and levels, meet with the requirement of development and represent the overall interest of the class, level or community.
In this sense, promotion of the China-ASEAN economic cooperation and trade in an innovative way should understand the demands of the consumers, which is also the social foundation for a more effective innovation. Therefore, only knowing the real demand of the 1.8 billion consumers can an innovative measure be formulated and gain the extensive support from the consumers. As in the development of the current China-ASEAN relations, the Government has already played the leading function, while such will need the coordination from the non-governmental organization. In this way, the suggestions and ideas of the masses can be learnt and the basic social foundation can be formed. The circles of media and publication should also exert their function in actively promoting the mutual understanding between China and ASEAN countries.
Currently, some non-governmental organizations have launched the activities, such as organizing the activities of China-ASEAN car rally, China-ASEAN Arts Festival and Week of Chinese Movies in some ASEAN countries etc. This has promoted the civilian exchanges and understand of both sides to some extent, while they are just at the start, for which, the market potentials of both sides should be probed into deeper.
(III) Enterprises: Strength innovation
Enterprises are the main body in constructing China-ASEAN Free Trade Area, and thus the enterpriser’s innovation would play an important role in the economic cooperation and trade of both sides. For a long time in the history, innovation has been a kind of individual activity, while the most feature of enterpriser is innovation. As the main body in the construction of the free trade area, facing the new market and new environment, an enterprise should take the initiative to probe into a new cooperating means as the new cooperating strategy, thus to gradually an operating model adapting to the unified market. Such will not be limited to the understanding and operation of the domestic market.
The development of TCL Group in Vietnam is a vivid example in this connection. From the continuous losses for 18 months in the initial stage to the firmly second place in the color TV market of Vietnam, the critical point in changing this situation was that TCL did not withdraw from the new market. On the contrary, aiming at the Vietnamese market, TCL kept innovating and developed a new type of color TV with strong reception and anti-thundering function. Such has created extraordinary effects on the users. As a result, the sale volume of TCL color TV kept increasing by surpassing all Japanese brands and standing firmly in the second position right after Sumsung. Within TCL, the Vietnamese market is called as the “money-drawing machine” of the Group.
The year of 2006 is the China-ASEAN Friendship Year. It is a new starting point for the further development in economic cooperation and trade between China and ASEAN as well as other countries. It can be anticipated that the mutual cooperation will emerge a more prosperous future.
Even though there still remain many pending problems to be solved during the current economic cooperation and trade, and there will be also many new circumstances that we should face in the future, we believe that, the trend of China-ASEAN economic cooperation and trade will be irresistible with our innovation. We also believe that innovation will bring about the win-win results to all sides of the China-ASEAN economic cooperation and trade.