China has re-affirmed its commitment to form a free-trade zone with the 10 members of the Association of Southeast Asian Nations (Asean) by January 2005. In preparation for two days of talks in the resort town of Guilin in Guangxi province, representatives from both sides announced they would start cutting tariffs in 2005 and by 2010 they would be reduced to zero. 'China and Asean do not have conflicting interests in natural resources, manufacturing, and agriculture, and in fact are complementary with each other's needs,' said Guo Li, a senior official at the Ministry of Foreign Trade and Economic Co-operation. Xinhua on Tuesday reported that formal talks on the tariff negotiations would start this year and would end in June next year. Tariff cuts would start in 2005 and a free-trade zone between China and Asean would be complete by 2010. Economists applauded the move, saying the free-trade area would allow China and Southeast Asia to build up mutual interests, rather than compete head on. 'This is a good plan,' said Huang Yiping, a China economist at US brokerage house Salomon Smith Barney in Hong Kong. 'This will cut down border restrictions. It will benefit consumers and producers in all countries in the region.' Bilateral trade between the mainland and the 10 member states of Asean reached US$54.8 billion (HK$426.3 billion) last year, up 31.8 per cent from 2001. 'This agreement should also lower Asean worries that China is hurting them,' said Mr Huang, 'and increase their support of China internationally.' Certain Southeast Asian leaders, including Singaporean Senior Minister Lee Kuan Yew and Malaysian Prime Minister Mahathir Mohamad, have said in the past that China's rise has come at the expense of their states. While foreign direct investment has risen rapidly in China, FDI has tapered off in Southeast Asia, especially since the 1997 economic crisis. However, a recent report from Deutsche Bank said China was actually helping the region much more than critics realised. 'In terms of growth in FDI and exports, empirical evidence suggests that some Asian economies have gained while others have lost, which may not necessarily be attributable to the China's emergency factor,' said the report. However, Mr Huang also urged the mainland and Asean to proceed carefully with their plans. 'As a member of the World Trade Organisation, China must remember that it cannot give preferential treatment to any one country,' said Mr Huang. 'This free-trade area is a good idea, but it must not infringe upon China's obligations under the WTO.'
