The Leaders of ASEAN and China welcomed the official launch of negotiations for the upgrade of the ASEAN-China Free Trade Area (ACFTA). The upgrade negotiations are meant to ensure that ACFTA contributes to the further deepening and broadening of ASEAN-China economic relations and to both region’s post-pandemic economic recovery. The announcement on the upgrade of the ACFTA was made at the 25th ASEAN-China Summit.
The ACFTA is ASEAN’s oldest FTA among its Dialogue Partners. Upgrading the ACFTA sends a signal to the private sector and all stakeholders that both ASEAN and China are committed to make the ACFTA more relevant to businesses, future-ready, and responsive to global challenges.
The upgraded ACFTA will cover areas of mutual interest, among them, digital economy, green economy, supply chain connectivity, competition, consumer protection, and Micro, Small, and Medium Enterprises (MSMEs).
China is ASEAN’s largest trading partner and the second largest source of Foreign Direct Investment (FDI). In 2021, the total merchandise trade between ASEAN and China reached US$ 669 billion, registering a year-on-year increase of 29 percent despite the lingering impact of the COVID-19 pandemic. During the same period, FDI flows from China to ASEAN amounted to US$ 13.6 billion, almost double the US$ 7.0 billion in 2020, and equivalent to 7.8 percent of total FDI flows to ASEAN.
Moving forward, the upgraded ACFTA would further support these trends and momentum.