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China-ASEAN ink investment agreement
Published on: 2009-08-17
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China took the final but crucial step Saturday to bring the China-ASEAN Free Trade Area (CAFTA) into existence after it signed the China-ASEAN Investment Agreement.
 
China's Commerce Minister Chen Deming and the economic ministers from 10 ASEAN members signed the agreement at the 41st ASEAN Economic Ministers' Meeting in Bangkok, Thailand.
 
The agreement marked completion of the negotiation process for CAFTA, which is to be realized by January 1, 2010.
 
"The investment agreement not only marked the successful completion of the major negotiations toward the CAFTA but also will promote investments between China and ASEAN," Zhang Kening, counselor with the International Department of the Chinese Ministry of Commerce, said in a statement Saturday.
 
Saturday's agreement, 27 articles included, aims to provide a free, transparent and just investment mechanism for investors from both sides, who can enjoy most-favored-nation treatment, fair citizen treatment, and fair and equitable treatment on reciprocal investment, said Zhang.
 
As of 2008, ASEAN nations had $52 billion in accumulated investment in China, with Singapore, Malaysia and Thailand ranked the top three. China's FDI to ASEAN countries reached $2.18 billion in 2008, increasing by 125 percent over 2007.
 
More and more Chinese enterprises want to invest in ASEAN nations, said Zhang.
The investment agreement was the last important agreement China needed to sign before it entered the China- ASEAN Free Trade Area. ASEAN countries can tap China's huge market, said Xu Ningning, secretary-general of China-ASEAN Business Council Chinese Secretariat.
 
At the same time, Chinese enterprises will enjoy new business opportunities, Xu said. 
 
ASEAN signed free trade agreements with countries including Japan, South Korea, India, Australia and New Zealand, countries with which China has not yet signed free trade agreements, Xu said.
 
Under the deal, if Chinese companies invest in ASEAN countries to produce, as long as they create a minimum added value of 40 percent on the product, the companies will enjoy a preferential tariff or even zero-tariff when exporting their goods to the countries that signed the free trade agreement with ASEAN nations, Xu said.
 
China signed the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China in November 2002, which kicked off the negotiation process for CAFTA, followed by the signing of Agreement on Trade in Goods in November 2004 and Agreement on Trade in Service in January 2007.
 
ASEAN is China's fourth largest trading partner after the European Union, the United States and Japan. In 2008, bilateral trade between China and ASEAN was $231.12 billion, up 13.9 percent from 2007.
 
But the first seven months of 2009 witnessed a 22.4 percent drop from the same period of 2008 to $107.43 billion due to the global economic downturn.
 
In April, the Chinese government proposed a fund of $10 billion and a loan of $15 billion to build infrastructure in the region over the next three to five years.
ASEAN member countries are: Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, Myanmar, Laos, and Cambodia.
 
CAFTA will cover an area of 13 million square kilometers with 1.9 billion people. It is the first free trade area that China negotiated to join and the first for the 10 ASEAN nations as a whole to negotiate externally, said Zhang.
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