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China-ASEAN free trade area: Origins, developments and strategic motivations

ISEAS Working Paper: International Politics & Security Issues
Series No. 1 (2003)

China-ASEAN Free Trade Area: Origins, Developments and Strategic Motivations

Sheng Lijun
Institute of Southeast Asian Studies, Singapore

China’s recent proposal to ASEAN countries of establishing a free trade
area (FTA) between them has marked an important milestone in the
development of China-ASEAN relations. This proposal has created
strong academic interest and brought about contending views. This
paper is a political study of the origins, developments and motivations
on the Chinese side of the FTA, demonstrating its political, strategic,
intellectual and economic basis. The events that shaped the FTA
include the accelerated globalisation, the recent Asian financial crisis,
the deteriorating Japanese economic performance, China’s entry into the
WTO, the 9/11 terror attacks on the United States and the reorientation
in the U.S. security policy. This study concludes that the China-ASEAN
FTA (CAFTA), if carried out with careful calculation and good co-
operation, can bring about more benefits than losses to both sides.
Otherwise, there will be losses where there shouldn’t be.

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