Last Friday while much of the world was nursing the hangover of a decade of war and terrorism, economic turmoil and environmental degradation, China and its Southeast Asian neighbors took a big step toward regional integration with the launch of a new free trade area (FTA). The long term implications for Yunnan are massive.
China and the Association of Southeast Asian Nations (ASEAN) have now entered the first phase of an FTA, eliminating tariffs on around 7,000 items including fruits, vegetables, textiles and machinery. These goods represent roughly 90 percent of trade in the new economic bloc, which is the world's largest in terms of population and third-largest after the EU and NAFTA in terms of GDP.
The first phase includes China and the more developed ASEAN members: Brunei, Malaysia, Indonesia, the Philippines, Singapore and Thailand. On Friday these countries also launched the first phase of an FTA within ASEAN itself. The remaining members – Cambodia, Laos, Myanmar and Vietnam – will join the ASEAN China FTA in 2015.
Although it does not directly border any of the first phase countries, Yunnan has much to gain from the FTA's launch. It has water, air and highway connections to Thailand plus air links to Malaysia and Singapore, all of which are expected to become even busier trade routes. The launch of the FTA has long been viewed as a major milepost in the rise of Yunnan as China's gateway to Southeast Asia.
As some observers note, the FTA is more than just a step toward trade integration, it is also a major strategic achievement for China, whose political power in Southeast Asia already greatly surpasses that of regional rival India and is also seriously challenging American influence in the region.
China's soft power in Southeast Asia will undoubtedly grow in step with trade within the FTA, and much of this influence will be projected from Yunnan.
In the coming decade, China and Southeast Asia will become increasingly connected by a vast network of highways and rail which will provide cities in Yunnan with cheap overland access to markets in Myanmar, Laos, Vietnam, Cambodia, Thailand, Malaysia and Singapore. Seated at the northern end of this transport web, Yunnan is poised to become an increasingly important international trade hub.
The initiation of the ASEAN China FTA is a modern revival of the ancient tea and horse caravan routes from centuries ago known as the South Silk Road, which linked China with Southeast Asian markets as well as Tibet and India.
Total trade between China and Southeast Asia was US$100 billion in 2004 and US$231 billion in 2008, but this is just the beginning. Bilateral trade – much of which will be passing through Yunnan – is expected to double over the next decade.
Difficult as it may be to imagine, Yunnan's days as an economic and political backwater are officially over.© Copyright 2005-2020 GoKunming.com all rights reserved. This material may not be republished, rewritten or redistributed without permission.