Thailand's
new Free Trade Agreement
with China:
The
China-Asean Free Trade Area (CAFTA)
By Jon Fernquest 
Asian
economies were the first to recover from the global economic crisis. The impact of the crisis on Asia would have been much less if Asian countries did not rely so heavily on trade with the US and Europe.
The China-Asean Free Trade Area (Cafta) that came into effect at the beginning of this year promises to reduce this reliance by increasing the proportion of intra-Asia trade in the trade of Asian nations thus insulating Asia from problems in the larger world economy (at least in theory).
Today's article provides a lot of background on the new China-ASEAN trade. The article begins after the vocabulary.
China-Asean Free Trade Area
(Cafta) - the FTA between ASEAN states and China that
began this year (See Wikipedia)
intra - within
insulate - protect from the outside, reduce negative effects and impact
intra - within
insulate - protect from the outside, reduce negative effects and impact
Economics
ASIA FOCUS: CHINA KNOWLEDGE
China links up with Asean to boost trade
8/03/2010Charles Chaw and Tony Wang
For a long time, China relied on the European Union and the United States as its major trading partners. In 2009, the trade value between China and these two giants accounted for 16.5% and 13.5% of China's total foreign trade, respectively.
However, the global financial crisis, which broke out in 2008, caused demand from the EU and the US to stagnate and shocked China's export-oriented economy.
links
- connections ความเชื่อมโยงกัน
links up with - connects with, makes connections with
boost - to increase; to strengthen เพิ่ม; ทำให้มีกำลังมากขึ้น
trade - the buying and selling of goods การค้าขาย
partners - the companies owning part of the joint venture หุ้นส่วน
trading partners - other countries that your country trades with
global - throughout the world ทั่วโลก
crisis - an urgent, difficult or dangerous situation วิกฤต
break out - when some bad condition starts spreading (example: there was a break out of the fatal disease in the country)
demand - people or consumers wanting to buy goods and services ความต้องการ
stagnate - stop moving forward, changing and progressing
oriented - directed towards
export-oriented - directed towards exports
links up with - connects with, makes connections with
boost - to increase; to strengthen เพิ่ม; ทำให้มีกำลังมากขึ้น
trade - the buying and selling of goods การค้าขาย
partners - the companies owning part of the joint venture หุ้นส่วน
trading partners - other countries that your country trades with
global - throughout the world ทั่วโลก
crisis - an urgent, difficult or dangerous situation วิกฤต
break out - when some bad condition starts spreading (example: there was a break out of the fatal disease in the country)
demand - people or consumers wanting to buy goods and services ความต้องการ
stagnate - stop moving forward, changing and progressing
oriented - directed towards
export-oriented - directed towards exports
China, seeking other markets for its goods, turned to the Association of Southeast Asian Nations. In 2008, Asean's gross domestic product exceeded US$1.5 trillion, and the association became one of the world's major economic powers.
Asean's foreign trade with China increased from less than $8 billion in 1991 to $2.1 trillion in 2009, accounting for 9.7% of China's total import and export value. Asean is now China's fourth-largest trading partner after the EU, the US and Japan, while China is Asean's third-largest trading partner.
In addition, China is a hot destination for investors from Asean member nations, especially Singapore. In the first 10 months of 2009, Singapore's direct investment in China reached $3 billion, accounting for 12.7% of China's total investment from foreign countries (excluding Hong Kong and Taiwan), second only to Japan.Asean is also one of the key destinations for China's overseas investment (excluding Hong Kong and Taiwan). In 2008, China's direct investment in Asean countries accounted for 11.4% of its total overseas investment, a proportion higher than that of the EU, the US or Japan.
domestic
- relating to a person's own country ภายในประเทศ
Gross Domestic Product (GDP) - a measure of economic activity in a country, the value of the country's output of goods and services. GDP is defined roughly as: GDP = Household Consumption + Business Investment + Change in Inventories + (Government Spending - Taxes) + (Exports - Imports) (See Economist Glossary)
exceeded - was more than
import - to buy or bring in products from another country นำเข้า
destination - the place where someone or something is going จุดหมายปลายทาง
hot destination - a place that many people like to travel to
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate) การลงทุน
direct investment, Foreign Direct Investment (FDI) - investing directly in production in another country, either by buying a company there or establishing new operations of an existing business (See The Economist's Glossary)
key - important คนสำคัญ
Gross Domestic Product (GDP) - a measure of economic activity in a country, the value of the country's output of goods and services. GDP is defined roughly as: GDP = Household Consumption + Business Investment + Change in Inventories + (Government Spending - Taxes) + (Exports - Imports) (See Economist Glossary)
exceeded - was more than
import - to buy or bring in products from another country นำเข้า
destination - the place where someone or something is going จุดหมายปลายทาง
hot destination - a place that many people like to travel to
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate) การลงทุน
direct investment, Foreign Direct Investment (FDI) - investing directly in production in another country, either by buying a company there or establishing new operations of an existing business (See The Economist's Glossary)
key - important คนสำคัญ
In a move to promote mutually beneficial co-operation, the China-Asean Free Trade Area (Cafta) was launched at the beginning of 2010.
Preparations for Cafta began in the 1990s, when countries Southeast Asian economies were badly hit by the Asian Financial Crisis. In 1999, China's then premier, Zhu Rongji, expressed the idea of strengthening China's economic ties with these countries and the Asean grouping agreed.
Ten years later, now that Cafta is finally set up, huge market benefits are expected.
beneficial
- helpful or good มีประโยชน์
mutually beneficial - everyone gains benefits from it
co-operation - working together to achieve goals
promote mutually beneficial co-operation -
free trade area (FTA) - an area that includes one or more countries that have agreed to reduce tarriffs (taxes on imports) to zero or at least a very low level
launched - began เริ่ม, started เริ่มต้นดำเนินการ
premier - prime minister
ties - relations; connections ความสัมพันธ์
benefits - goods things that can happen from an activity ผลประโยชน์
expected - believe will happen คาดว่า (จะเกิดขึ้น)
mutually beneficial - everyone gains benefits from it
co-operation - working together to achieve goals
promote mutually beneficial co-operation -
free trade area (FTA) - an area that includes one or more countries that have agreed to reduce tarriffs (taxes on imports) to zero or at least a very low level
launched - began เริ่ม, started เริ่มต้นดำเนินการ
premier - prime minister
ties - relations; connections ความสัมพันธ์
benefits - goods things that can happen from an activity ผลประโยชน์
expected - believe will happen คาดว่า (จะเกิดขึ้น)
The region contains nearly 2 billion people, has a GDP of more than $6 trillion and generates about $4.5 trillion in trade. It is the most populous free trade area in the world.
Trade between China and Asean surged rapidly in the fourth quarter of 2009, much faster than trade with the US, the EU and Japan.
After Cafta was set up, more than 7,000 types of goods, accounting for 90% of the trade list, were tax-exempt. The free trade area will surely further improve the trade conditions between the two sides. In 2004, when some agricultural products were designated tax-exempt, the trade value of such products grew by more than 40.
generates - creates
populous - having a lot of people living there ซึ่งมีพลเมืองหนาแน่น
surged - increased quickly เพิ่มขึ้นอย่างรวดเร็ว
fourth quarter - the last three months of the year for business or government (one year = 4 quarters)
exempt - permission not to do something
tax-exempt - don't have to pay taxes
improve - to make better ทำให้ดีขึ้น
designated - formally chosen แต่งตั้ง, ที่ได้รับการแต่งตั้ง
populous - having a lot of people living there ซึ่งมีพลเมืองหนาแน่น
surged - increased quickly เพิ่มขึ้นอย่างรวดเร็ว
fourth quarter - the last three months of the year for business or government (one year = 4 quarters)
exempt - permission not to do something
tax-exempt - don't have to pay taxes
improve - to make better ทำให้ดีขึ้น
designated - formally chosen แต่งตั้ง, ที่ได้รับการแต่งตั้ง
However, along with huge market potential, come problems.
Asean and China, where labour-intensive industries dominate, are the most important manufacturing bases in the world. The similarity in industrial structures results in export goods of the same category.
potential
- possible, what could be achieved, the possibility of
success ความเป็นไปได้, ที่มีศักยภาพ, ที่เป็นไปได้
market potential - the possibility of gaining large numbers of new customers in an area
intensive - involving a lot of effort, energy, or attention
labour-intensive - using a lot of labour (produced manually by workers, not automatically by machines)
dominate - to be the most powerful or most important thing in an area or situation มีอิทธิพลเหนือ, มีอำนาจเหนือ
results - what is produced in the end by an activity or task
category - a group of people or things that have similar qualities หมวดหมู่ ประเภท
market potential - the possibility of gaining large numbers of new customers in an area
intensive - involving a lot of effort, energy, or attention
labour-intensive - using a lot of labour (produced manually by workers, not automatically by machines)
dominate - to be the most powerful or most important thing in an area or situation มีอิทธิพลเหนือ, มีอำนาจเหนือ
results - what is produced in the end by an activity or task
category - a group of people or things that have similar qualities หมวดหมู่ ประเภท
Asean's top export product is electrical machinery, and so is China's. In 2008, Asean's exports of such products hit $175.5 billion, accounting for 23.4% of its total exports. The same year, China's exports of electric machinery hit $342.1 billion, accounting for 23.9% of its total exports. Exports of nuclear reactors, boilers, machinery and mechanical appliances, are all major export products for both Asean and China.
Therefore, the trade relationship between China and Asean is mostly competitive, not complementary. This is true because low costs and abundant labour are the main advantages for both sides. One month before the launching of Cafta, Indonesia's 14 industrial associations expressed concern over the zero tariff, which may damage Indonesia's own industries, in the hopes of delaying the agreement.
nuclear reactor - buildings
and machines that create electricity from nuclear chemicals (See Wikipedia)
boiler - machine that heats water and provides hot water
mechanical - operated by a machine or system of moving parts (examples: a mechanical device, a mechanical wheelchair)
appliances - machine or equipment
competitive - involving competition มีการแข่งขัน
abundant - large amounts, more than enough มากมาย
industrial associations - an organisation that represents a group of companies in the same industry
concern - a worry ความกังวล
expressed concern over Y - told people they were worried about issue Y
tariff - tax on imports
boiler - machine that heats water and provides hot water
mechanical - operated by a machine or system of moving parts (examples: a mechanical device, a mechanical wheelchair)
appliances - machine or equipment
competitive - involving competition มีการแข่งขัน
abundant - large amounts, more than enough มากมาย
industrial associations - an organisation that represents a group of companies in the same industry
concern - a worry ความกังวล
expressed concern over Y - told people they were worried about issue Y
tariff - tax on imports
Despite such efforts, Cafta was finally launched. Rather than intensifying competition between the nations, Cafta brought about opportunities to make the best use of the manufacturing facilities in the region.
Take steel products as an example. Asean has much higher steel production costs than China, and lacks sufficient steel output capacity. In contrast, China has excess steel capacity.
efforts
- people trying to accomplish something, achieve a goal ความพยายาม
intensifying - increasing the amount of activity being done
opportunities - situations in which it is possible to do what you want or need to do
facilities - the buildings, equipment and services provided for a particular purpose สิ่งอำนวยความสะดวก
sufficient - enough พอเพียง
capacity - the amount of something that can be produced ความสามารถในการ (ผลิต)
excess - greater than is usual; too much of something มากเกินปริมาณที่พอดี
excess capacity - ability to produce that is not fully used
intensifying - increasing the amount of activity being done
opportunities - situations in which it is possible to do what you want or need to do
facilities - the buildings, equipment and services provided for a particular purpose สิ่งอำนวยความสะดวก
sufficient - enough พอเพียง
capacity - the amount of something that can be produced ความสามารถในการ (ผลิต)
excess - greater than is usual; too much of something มากเกินปริมาณที่พอดี
excess capacity - ability to produce that is not fully used
In the first 11 months of 2009, China's Guangdong Province saw its steel exports to Asean reach 418,000 tonnes, accounting for one-third of its total steel exports. China's Yunnan Province released a plan to make steel a key export to Asean. In December 2009, Indonesia's TPT held a meeting with China's Wuhan Iron and Steel, hoping to increase its imports of steel from China.
In addition to steel, there are other products, such as organic chemicals and fossil fuels. In a word, Cafta will be more beneficial than harmful. Together with Japan and South Korea, a large free trade region is forming in East Asia. Learning how to grasp the opportunity will be a crucial task for each player.
Charles Chaw is the Managing Director of China Knowledge Consulting based in Hong Kong, and Tony Wang is a research analyst with the firm in Chengdu, Sichuan. The firm provides corporate, financial advisory and market strategy to foreign businesses seeking opportunities in China. The opinions expressed are their own.
released
- made available to the public
meeting - when a group of people come together to discuss issues and make decisions การประชุม
organic - "organic compounds contain carbon and can produce energy" (See Wikipedia)
fossil fuels - fuels like oil and coal formed from fossils, dead organisms that decomposed over millions of years (See Wikipedia)
free trade region - same as "free trade area" above
grasp - control
opportunity - a situation when it is possible to do something that you want to do (See glossary)
crucial - extremely important because it effects the result of something สำคัญยิ่ง
task - something that you have to do หน้าที่
firm - a business or company บริษัม
strategy - a plan to achieve long term goals ('strategy' gives the big picture, 'tactics' the details)
meeting - when a group of people come together to discuss issues and make decisions การประชุม
organic - "organic compounds contain carbon and can produce energy" (See Wikipedia)
fossil fuels - fuels like oil and coal formed from fossils, dead organisms that decomposed over millions of years (See Wikipedia)
free trade region - same as "free trade area" above
grasp - control
opportunity - a situation when it is possible to do something that you want to do (See glossary)
crucial - extremely important because it effects the result of something สำคัญยิ่ง
task - something that you have to do หน้าที่
firm - a business or company บริษัม
strategy - a plan to achieve long term goals ('strategy' gives the big picture, 'tactics' the details)
(Source: Economics, ASIA FOCUS: CHINA KNOWLEDGE, China links up with Asean to boost trade, 8/03/2010, Charles Chaw and Tony Wang, link)
