Sino-ASEAN Trade Relations
A salient feature in the economic development of China and ASEAN“ is the important role that foreign trade has played in driving the economic growth of these countries. Over the past three decades. the ASEAN. which by nature are very open and outward-looking economies. have become one of the world's most dynamic regions on account of their strong export growth, fueled largely by foreign investment. Though China lags behind the ASEAN-5 in pursuing export-oriented industrialization (EOI). it has experienced phenomenal growth in recent years. For the past two decades. Chinese exports have increased at a hefty annual rate of 15% (or more than twice the world's average). from $l3.7 billion in I979 to $325.6 billion in 2002, catapulting China to the rank of the world's fifth-largest exporting nation.” Recent trade relations between China and ASEAN have been influenced mainly by the growth and expansion of both economies. and China‘s drive toward economic modernization. In the past decade. there was respectable growth in trade and economic relations between China and ASEAN as a whole. with trade value totaling around $8 billion in I99]. increasing to over $40 billion in 2O0l.'3 As of that year. China's trade volume with Southeast Asia ranked highest with Singapore. followed at a distance by Malaysia. Thailand. and Indonesia. and then trailing far behind. the Philippines (refer to Figure I). Of the steady growth in bilateral trade. Singapore accounted for the bulk of trade between China and ASEAN. In 2001. ASEAN was China's fifth-largest trading partner, next to Japan, the U.S., the European Union. and Hong Kong.“ This is reflected in the continuous rise of ASEAN‘s share in China‘s foreign trade from 5.8% in 1990 to 8.2% in 2001. Meanwhile, the share of China in ASEAN‘s trade expanded from 2.3% in l99l to 6% in 2000. Making China ASEAN's sixth-largest trading partner.
An examination of the pattern of trade between China and ASEAN reveals that the composition of China-ASEAN trade had evolved considerably. Originally, the ASEAN countries (except Singapore) were resource-based economies depending heavily on the export of natural resources and primary goods for economic growth. In the early l990s. for instance, the top two ASEAN exports to China were mineral fuels and wood (Table 1). Collectively. the share of these products accounted for more than 50% of all ASEAN exports to China. By 200]. however. the order of importance had changed. Two- way trade between China and ASEAN had shifted from commodities toward manufactured products. As seen from Table l, the share of machinery and electrical equipment grew from l2.4% to 48.3% of China's imports from ASEAN. Comparatively. China's exports to ASEAN were more diversified. ranging from agricultural commodities, metals, and mineral products to other manufactured goods. ln I993. among the wide variety of products that China ex- ported to ASEAN. Machinery and electrical equipment. minerals. vegetable commodities. base metals, textiles, and apparel and footwear constituted the top items in bilateral trade. Collectively. they constituted close to 70% of China‘s exports to ASEAN. By 2001. machinery and electrical equipment. as well as textiles. clothing. and footwear. continued to be among the top commodities traded. but their share had jumped to 61.7%. or more than half of all China's exports to ASEAN.
It can be seen that over the course of nearly a decade. the trade structures of China and ASEAN show an increasingly important cyclical trend of manufactured products, and a declining share of primary commodities. The com- position of trade between China and ASEAN has shifted significantly as it has advanced from the trading of mostly agricultural raw materials to capital- intensive items like machinery and electrical equipment. This significant change is attributed to ASEAN and China pursuing the EOI strategy. which diversifies the composition of their exports. In the early industrializing years of the l970s. the commodity composition of ASEAN‘s foreign trade was essentially dominated by primary commodities. but by the end of the l990s. manufactured products were the predominant items traded.
Compared with the ASEAN countries ‘export structure. China's trade structure has also exhibited significant shifts and rapid changes following China‘s phenomenal export growth in recent years. Of significance is the fact that China actually accomplished its export diversification more quickly than did ASEAN. The share of Chinese manufactured products rose rapidly from 47% of total exports in 1980 to 90% in 2000.More importantly. in 1995 non-traditional capital-intensive goods such as machinery and electronics started to displace the labor-intensive items of textiles, clothing, and foot- wear (TCF). The dramatic shift in China's industrial and export structure by the end of the 1990s owes a great deal to foreign-invested enterprises using China as an assembly platform for components or finished products. From the pattern of China's trade with ASEAN, it appears that the sectors where intra-industry trade is large are machinery and electrical equipment. lt is noted from a recent report submitted by the ASEAN-China Expert Group that the machinery and electrical appliances exported by China to ASEAN are mostly for general or special use. On the other hand. a substantial part of the machinery and electrical appliances that China imports from ASEAN are electronic components and devices. For example. Singapore's most important exports to China in 2000 were mainly electronic valves. parts for data processing machines. and other components for industrial electrical equipment. ln the same year. industrial manufactured goods. which constituted 57% of the Philippines‘ total exports to China. were mostly made up of semi- conductors. Imports of transistors. integrated circuits. and other electronic devices similarly account for a relatively high percentage in China‘s imports of machinery and electrical appliances from Malaysia and Thailand.