MAY 29 China would consider forming a free-trade zone with Russia and four central Asian countries, Trade Minister Shi Guangsheng said yesterday. Mr Shi was speaking at the first meeting of trade ministers of the Shanghai Co-operation Organisation, which groups China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and newcomer Uzbekistan. 'The first stage is to negotiate the issue of trade and investment facilitation,' he said. 'In the future, after realising trade and investment facilitation, we can study the question of whether or not to establish a free-trade zone.' According to China's Foreign Trade Ministry, the six countries together have an economy worth US$1.3 trillion, a population of 1.5 billion and an area of 30.17 million sq km. China is already negotiating with Southeast Asian countries to form a free-trade zone in the next 10 years, in response to fears over its cheap exports and growing economic might. The trade zone embracing China and member states of the Association of Southeast Asian Nations would have 1.7 billion consumers and account for US$1.2 trillion in trade, officials said. China is also holding talks with Hong Kong on free-trade arrangements. Russian officials said it would take time to establish a free-trade zone in Central Asia. 'This will not happen in a short time,' one official said. Trade between China and the other five countries is small, with volume of about US$12.2 billion last year, just 2 per cent of the US$510 billion in total trade. However, China wants to find new markets for its products and develop its lagging western regions, which border Central Asia. A net oil importer, China also is eager to find new sources of energy. The five other member states of the Shanghai Co-operation Organisation hoped to sell more oil to China, their officials said. The grouping, originally known as the Shanghai Five, was set up in 1996 to resolve border disputes. Analysts said that its focus had shifted since then to fighting separatists and to offsetting the influence of the United States in the region since the start of the war on terrorism in Afghanistan. A joint statement issued at the end of yesterday's half-day meeting formally announced the setting up of a 'mechanism' to promote trade. The six countries would increase co-operation on transport, energy, telecommunications and environmental protection, the statement said. 'Economic co-operation is the key part of the Shanghai Co-operation Organisation,' Mr Shi said in an opening address to the meeting. Officials said it would take time to set specific investment projects but the group could play a key role. Russia's Deputy Trade Minister Dimitry Suhoparov said: 'At this time, we can't specify investment projects, but at the meeting today we set the direction of our work.' Russia and China agreed last year to build a 2,400km oil pipeline by 2005 to help fuel China's booming economy. Wang Lingyi, an economist with the Shanghai Academy for Social Sciences Asia-Pacific Research Centre, said a free-trade zone would be a step forward for the countries of Central Asia, after resolving border disputes and establishing mutual trust. Such a zone was an ideal target, fuelled mostly by governments, Mr Wang said. The countries have not had high-profile business and trade relations. However, Mr Wang said the plan would boost the region's development, especially with the huge potential of the resources.