China-ASEAN Free Trade Area celebrated its first anniversary in the beginning of 2011. China has witnessed tremendous changes in commerce and trade with ASEAN countries, including the Philippines, and the free trade area added vigor to Sino-Philippine economic cooperation, Xinhua reported.
Statistics from China's General Administration of Customs showed that bilateral trade volume between China and ASEAN in the first 11 months of 2010 amounted to US$263.01 billion, up 40 percent over the same period from the previous year. China's exports to ASEAN reached US$124.45 billion, up 33.6 percent; China's imports from ASEAN mounted to US$138.56 billion, up 47.5 percent.
"It is against this backdrop that total imports and exports in the first 11 months of 2010 between China and the Philippines amounted to US$25.229 billion, up 38.8 percent over the same period in the previous year. China's exports reached US$10.507 billion and imports amounted to US$14.722 billion, an increase of 39.5 percent and 38.4 percent respectively,” Wu Zhenping, economic and commercial counselor of the Chinese embassy in the Phillipines, said. “The Philippines enjoyed a trade surplus of US$4.215 billion, increasing significantly."
Wu said China was now the third largest trading partner of the Philippines, while the Republic of the Philippines was the sixth largest trade partner of China in the 10 ASEAN countries. From January to September 2010, China's new non-financial direct investment to the Philippines amounted to US$72.94 million, an increase of 315.9 percent, becoming second to Malaysia. Over the same period, China imported from the Philippines contracted foreign capital worth US$63.35 million, an increase of 177.4 percent – the highest growth rate in the region. The amount of China's contractual foreign capital from the Philippines has accumulated up to US$6.1 billion over recent years.
"We can say that the Republic of the Philippines is becoming one of the major destinations for Chinese enterprises to invest overseas and boasting a promising future," Wu said. He also said that China's investment in the Philippines was concentrated on manufacturing, and China's investment from the Philippines mainly flew to the retail and catering industries. The rapid growth of mutual investment reflects the promising prospects for cooperation across all sectors.
China-ASEAN Free Trade Area was established formally on Jan. 1, 2010, after which China's average tariff on ASEAN countries decreased from 9.8 percent to 0.1 percent, while the average tariff of the six original members of ASEAN (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) on China dropped from 12.8 percent to 0.6 percent. The four new members – Vietnam, Laos, Cambodia and Myanmar – will receive tariff-free status on 90 percent of their commodities in 2015.
Wu said: "China and ASEAN have nearly realized bilateral free trade, which will certainly help improve the efficient flow of financial resources, technology and talent and other production factors. In the past year, the Sino-Philippine trade and investment accelerated greatly, with deepening economic integration and more benefit for businesses and people.”
Asian Development Bank (ADB) conducted a survey on the Philippine enterprises in early 2010. The results showed that among all the free trade zone agreements that the Philippines had signed, the China-ASEAN agreement was most favored by the Filipinos. Most enterprises surveyed felt that this agreement was the most important trade agreement to the Philippines.
However, the utilization rate of zero-tariff free trade zone in the Philippines should be greatly improved. ADB survey showed that its utilization rate in the Philippines only reached 20 percent – lower than the region's average, 28 percent. Problems like the need of relevant knowledge of the free trade zone, the complexity of the Certificate of Origin application procedures and the high cost were the most to blame.
Wu said both sides expect better promotion of the preferential policy, more assistance for new businesses and faster diversification of trade goods.