OUTLINE Effects of the new Asian regionalism, stimulated by the China-ASEAN Free Trade Agreement (CAFTA), to South East

Asia As a rapidly growing economy, China offers enormous potential for the export-oriented ASEAN members. Since China-ASEAN Free Trade Agreement (CAFTA) helped ASEAN countries in terms of supplying resources as well as combining markets, and form a comprehensive economic partnership with China, the significant result can be seen in various ways. The presentation will concentrate on the advantages and disadvantages of the CAFTA towards South East Asia region from the economic perspectives. Advantage (YOK) Effect#1: ASEAN region will become cross-border economic zone. With CAFTA, multinational corporations will gradually restructure their supply chains and rationalize their production networks to take China and ASEAN as a single market, resulting in a redistribution of FDI flows and trade in the combined region. Supporting material Water transport along the Upper Lancang/Mekong River covering China, Laos, Myanmar, Thailand, and Vietnam Rail and road links that will stretch down from Yunnan Province of China to Chiang Rai of Thailand and eventually connect to ASEANs Singapore-Kunmin Rail Project ASEAN Economic Community in 2015

(NUS) Effect#2: China-ASEAN FTA will undeniably enhance the capacity of the regional economies to tackle the crisis. The free trade area is of greater significance amid the ongoing global financial crisis and rising trade protectionism. Furthermore, it will also help augment cultural exchanges and integration in the region and the mutual understanding between China and ASEAN nations. Supporting material

Disadvantage Effect#1: (PINK) pink Risk and limitation of local supplier Supporting Material: Effect#2: (NUS) The government of many countries in this agreement has sought to soothe concerns that industries including textiles, iron, steel, and electronics would suffer from the onslaught of the flood of cheap Chinese imports. For instance, if the tariff of most of the tradable commodities is down to zero, the high-tariff industries such as textiles and electronics in Indonesia and the Philippines would be hit hardest by the blitz of low-cost Chinese manufacturing goods. Effect#3: (NUS) ASEAN nations would become Chinas backyard due to Chinas rising role in East Asia. The major goods China imports from ASEAN countries are intermediary goods, such as machinery, minerals and fuels, plastics, fats and oils, rubber and organic chemicals. As China produces low-cost products and sells them mainly to the United States and the European Union, which were recently hit by the economic downturn. Then the future trade pattern between China and ASEAN countries will mainly rely on Chinese role as a consumer to absorb the goods it produces. With limited domestic demand, if China continues to be exposed to the external economic shocks, further collaboration on trade issues between China and ASEAN countries would become more difficult. Supporting Material