ASEAN and China share a complex relationship in economic terms; while they collaborate in several spheres, conflict of interests is not uncommon either. The proposal for an ASEAN–China Free Trade Agreement (ACFTA) was floated in 2000, and the agreements covering merchandise trade, services trade and investment collaboration were signed in 2004, 2007 and 2009 respectively. ASEAN countries agreed to consider China as a market economy in the course of the negotiations and the ACFTA has resulted in several benefits for both parties, including tariff reduction on substantial number of product lines, considerable growth in merchandise and services trade volume, deepening of intra-regional production networks, regional cooperation on infrastructural development and so on. However, rapid growth of Chinese imports in ASEAN markets and expanding trade deficit generates apprehension in the grouping over potential domestic restructuring. Subisidies provided by the Chinese government to its domestic players also compound the problem. This article concludes that ASEAN countries need to augment their competitiveness through coordinated efforts on the one hand, and jointly negotiate with China to curb the disruptive effects of the latter’s incentive programmes, on the other.
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