China plans new trade zones for ASEAN

China’s Ministry of Commerce announced plans to establish two demonstration zones by 2035 to improve innovative economic and trade ties with the Philippines and Indonesia.

The zones will be located in the eastern coastal province of Fujian, China’s “bridge and bond” to Southeast Asia. The Indonesian zone will prioritize fisheries, food industry, and infrastructure, while the Philippine zone will focus on petrochemical, agriculture, and poultry processing industries, as well as digital trade and innovation investment.

The establishment of the innovative economic zones is part of a commitment made by Chinese President Xi Jinping in November 2021, pledging to “enhance trade and investment liberalization and facilitation” to mark the 30th anniversary of China’s diplomatic ties with ASEAN.

ASEAN is China’s largest trading partner and, in 2020, accounted for 14.7% of ASEAN’s total trade. China and ASEAN are also part of the world’s largest free trade agreement involving 15 countries, the Regional Comprehensive Economic Partnership, which accounts for 31% of the world’s GDP.

However, the launch of the new economic zones comes at a time of rising tensions over the South China Sea, where China has territorial disputes with several ASEAN members. On Monday, the Philippine coastguard accused a Chinese vessel of shining a “military-grade laser light” at one of its boats near a disputed South China Sea reef, blinding crew members. Both Manila and the US have criticized China’s actions as provocative, with the Philippine government filing a protest with the Chinese embassy.