Abstract

China's proposal of the CAFTA (China-ASEAN Free Trade Area) in 2001 prompted a great debate about whether China was a trade competitor of ASEAN, given their similarity in economic development levels and trade/export structures. That Beijing shifted its focus on economic cooperation from the international level to the regional level led to its proposal of the CAFTA. As the Framework Agreement (Framework Agreement on Comprehensive Economic Cooperation between China and ASEAN) showed, Beijing's careful consideration for four newer ASEAN members (Cambodia, Laos, Myanmar and Vietnam) intended not only to help all ASEAN members develop economically, but also to narrow the economic gap existing between them and the six old ASEAN members; in return, China was recognized as a full market economy, which it is not currently recognized within the framework of the WTO. The substantial rise in bilateral trade and the structural changes of the trade in goods between China and ASEAN member nations after 2001 proves that ASEAN benefited more from the CAFTA, particularly when the areas where ASEAN had the comparative advantages were designated as the priority cooperation areas between China and ASEAN. In sum, similarities existing in economic development levels and industrial structures between China and ASEAN made them natural economic competitors. However, closer studies of trade in goods of S1-7, S1-6 and S1-0 reveal that China acted as an increasingly complementary trade partner of ASEAN after 2001.