Competitiveness of the ASEAN Countries

Competitiveness of the ASEAN Countries

Corporate and Regulatory Drivers

New Horizons in International Business series

Edited by Philippe Gugler and Julien Chaisse

In an age of increased necessity for competitiveness of nations and at a time when the world economy is facing recession, this book explores the possible trajectory of ASEAN – arguably one of the most dynamic areas in the world – as a regional economic and political bloc. The expert contributors address the industrial competitiveness of ASEAN and analyse the role of MNEs against the background of the challenges of integration. They illustrate that regional integration will only be a success if ASEAN’s linkages are broadened with global partners through negotiations of Free Trade Agreements. The book concludes that although much still remains to be done, and many promises are still to be unveiled, ASEAN’s ‘coming of age’ is an historic milestone.

Chapter 11: ASEAN–China FTA: A Pragmatic Approach to Regulating Services and Investment

Jun Xiao

Subjects: asian studies, asian business, asian economics, business and management, asia business, international business, economics and finance, asian economics, international economics


Jun Xiao BACKGROUND China is the largest and most populous neighbouring country of ASEAN. China has a land area of about 9.6 million square kilometres, and is the third-largest country in the world, next only to Russia and Canada. With a population estimated at about 1.3 billion by the end of 2005, one fifth of the world’s total, China is the world’s most populous country.1 Since initiating its reforms and open policy in 1978, China has become one of the largest economies in the world with an averaged growth rate of about 10 per cent per year. In 2007, China’s gross domestic product (GDP) was US$3280 billion. It is the world’s fourth largest economy, behind the United States, Japan and Germany, although in per capita terms, China is still a lower middle-income country.2 China is deeply integrated in terms of global trade and investment penetration. It is the world’s third largest trading nation, trade in goods is 70 per cent of GDP, foreign direct investment (FDI) stock stands at almost 40 per cent of GDP, and multinational enterprises account for about 60 per cent of merchandise trade. For these reasons, China is playing an increasingly important economic and political role worldwide and in the Asia-Pacific region. Accordingly, for ASEAN countries, the importance of their economic and (geo-)political relationship with China is certain. China has long land borders with three ASEAN countries, namely, Myanmar, Laos and Vietnam. The border disputes between China and Vietnam have been settled recently by...

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