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In 2010, the ringing of the New Year’s bell will not only mark the arrival of a new year but also signal a new era of economic opportunities for China and ASEAN. As the China-ASEAN Free Trade Area (CAFTA) becomes fully operational on January 1, 2010, Chinese consumers will gain access to more affordable goods from neighboring countries, such as Vietnamese fruits, Indonesian coffee, and Philippine coconut sugar. For businesses, this means a more streamlined path for investment across the six ASEAN nations.
At a press conference held just days before the official launch, Zhang Kening, Commercial Counselor at the Ministry of Commerce's International Department, highlighted that CAFTA is now the world's third-largest free trade area, following the EU and NAFTA. By 2010, over 90% of products traded between China and the six original ASEAN members—Brunei, the Philippines, Indonesia, Malaysia, Thailand, and Singapore—will be tariff-free. China’s average tariff on ASEAN imports will drop from 9.8% to 0.1%, while ASEAN’s average tariff on Chinese goods will fall from 12.8% to 0.6%. The four newer ASEAN members—Vietnam, Laos, Cambodia, and Myanmar—are expected to meet the same 90% zero-tariff target by 2015.
This regional trade agreement covers a population of nearly 1.9 billion people, with a combined GDP of almost $6 trillion and an annual trade volume of $4.5 trillion. Since its inception in 2003, bilateral trade between China and ASEAN has grown rapidly, rising from $78.2 billion to $231.1 billion in 2008—a 24.2% average annual growth rate. As a result, ASEAN has moved from being China’s fifth-largest trading partner to the fourth, while China has become ASEAN’s third-largest trading partner.
The expansion of trade has also led to a significant increase in mutual investments. ASEAN’s direct investment into China grew from $2.93 billion in 2003 to $5.46 billion in 2008, while China’s investments in ASEAN rose from $230 million to $2.18 billion during the same period—an almost ninefold increase. Despite the global financial crisis, trade between China and ASEAN declined less sharply than other regions during the first 11 months of 2009, showing the resilience of the relationship.
For Hunan-based enterprises, the benefits of the free trade zone are already evident. Wang, from the International Department of Chenzhou Grain and Oil Machinery Co., Ltd., said that the elimination of tariffs on over 7,000 products will significantly boost the competitiveness of their grain and oil machinery in ASEAN markets. “Currently, import duties in Indonesia can be as high as 20–30%. With zero tariffs, we’ll have a much better cost advantage when competing against Japanese or other foreign products,†he explained.
Hunan Yinzhou Grain and Oil Machinery Co., Ltd., a leading manufacturer of rice processing and storage equipment, has been exporting to Southeast Asian countries for over 40 years. Their products are widely used in Indonesia, the Philippines, and Thailand, with sales reaching millions of yuan annually.
According to the World Trade Organization Office of the Hunan Provincial Department of Commerce, most ASEAN countries are developing economies with rich natural resources but underdeveloped manufacturing sectors. These nations are ideal destinations for Chinese companies looking to implement their "going out" strategy. At the 6th China-ASEAN Expo this October, buyers from Vietnam, Myanmar, Indonesia, Thailand, and Cambodia showed strong interest in Hunan’s agricultural and grain processing machinery.
Another example is Hunan Lingling Hengyuan Power Equipment Co., Ltd., which recently opened an office in Vietnam to handle overseas marketing for its hydroelectric generating units. The company’s representative stated, “The establishment of the free trade zone will provide a more open, stable, and optimized environment for our business.â€
July 14, 2025