2021-10-31-普华永道-China_ASEAN_investor_confidence_survey_report_72页_5mb

China-ASEAN Economic and Trade Cooperation Survey Report: Investor Confidence and Outlook

Core Content

This report provides an in-depth analysis of the current status and future outlook of economic and trade cooperation between China and ASEAN, based on a survey of enterprises in both regions. It highlights the growing importance of ASEAN as a key economic partner for China and outlines the confidence and strategies of enterprises in both regions regarding investment and trade.

Main Points and Findings

1. China-ASEAN Economic and Trade Cooperation Development

• In 2021, China and ASEAN celebrated the 30th anniversary of their dialogue relationship, which has been marked by significant progress in economic integration and trade.
• In 2020, ASEAN became China's largest trading partner, and China became ASEAN's largest source of foreign investment.
• The two sides have achieved substantial milestones in cooperation, including the establishment of the China-ASEAN Free Trade Area (CAFTA) in 2010 and the signing of the Regional Comprehensive Economic Partnership (RCEP) in 2020.
• Key events in their cooperation timeline:
  • 1991: China established a dialogue relationship with ASEAN.
  • 2003: China and ASEAN established a strategic partnership.
  • 2010: CAFTA was established.
  • 2015: Agreement to upgrade the Free Trade Area.
  • 2018: China-ASEAN Strategic Partnership Vision 2030 was released.
  • 2021: 30th anniversary of the dialogue relationship and the promotion of RCEP.

2. Economic Significance

• China and ASEAN together account for 28% of the global population, 21% of the global economy, 41% of international trade, and 33% of foreign direct investment (FDI).
• The economic and trade relationship has become a crucial component of global economic development and serves as a model of multilateralism and economic globalization.
• The collaboration has contributed to regional stability, social welfare, and global economic exchanges.

3. Survey Methodology and Scope

• The survey was conducted between July 20 and August 15, 2021, using questionnaires and interviews.
• It involved 220 business representatives, with 28 different questionnaire topics for Chinese and ASEAN enterprises respectively.
• The survey focused on trade and investment status, future plans, confidence levels, and the perceived impact of RCEP.
• The survey results align with observed market conditions and reflect the views of enterprises in the manufacturing sector, which dominates the ASEAN market.

4. Chinese Enterprises

Current Status

• 61% of Chinese enterprises have established trade relations with ASEAN, with the majority being manufacturing and non-state-owned enterprises.
• 50% of respondents have trade volume with ASEAN exceeding 10% of their international trade business.
• 30% of respondents consider ASEAN as one of their top three international markets.
• 38% of Chinese enterprises have made investments in ASEAN, with manufacturing and state-owned enterprises leading the way.

Outlook

• 50% of Chinese enterprises consider the ASEAN market "important" or "very important".
• 57% have future business plans specifically tailored for ASEAN.
• 56% regard ASEAN as their target market for exports.
• 46% plan to increase investment in ASEAN over the next three years, with a focus on manufacturing and existing business sectors.
• 66% of Chinese enterprises have expressed an intention to invest in ASEAN in the long term, driven by market access and strategic diversification.
• Support needed includes tax incentives, capital flow convenience, talent, and market openness.

RCEP Impact

• 69% of Chinese enterprises believe RCEP will create new opportunities for economic and trade cooperation.
• 62% believe RCEP will have a positive impact on their business.
• 33% expect RCEP to help expand overseas markets.
• 48% and 44% believe RCEP will facilitate trade development and accelerate industrial upgrading.

5. ASEAN Enterprises

Current Status

• 65% of ASEAN enterprises have started trading with China.
• 61% have trade volume with China exceeding 10% of their global trade.
• 44% of ASEAN enterprises consider China their largest trade market.
• Only 25% of ASEAN enterprises have invested in China, with Singapore, Thailand, and Malaysia leading the way, mainly in manufacturing.

Outlook

• 57% of ASEAN enterprises have further business plans in the Chinese market.
• 45% are willing to accept Chinese investment, with Thailand and Singapore leading in this area.
• The main reasons for accepting Chinese investment include access to capital, market, and technology.
• 33% of ASEAN enterprises with investment plans intend to make new investments in China, spread across various industries.
• Investment focuses on production plants, sales, and procurement centers.

RCEP Impact

• 66% of ASEAN enterprises believe RCEP will create new opportunities for economic and trade cooperation.
• 49% expect a relatively optimistic or positive impact from RCEP.
• They believe RCEP will benefit their enterprises through trade facilitation, cost reduction, and overseas market expansion.
• 49% are concerned that ASEAN's manufacturing industry may be disrupted by more capital-intensive and technologically advanced overseas manufacturing sectors.

Key Information

• Trade Volume: Bilateral trade between China and ASEAN reached $410.75 billion in the first half of 2021, showing a 38.1% year-on-year increase.
• Investment: As of June 2021, total mutual investment between China and ASEAN exceeded $310 billion.
• RCEP Impact: Both Chinese and ASEAN enterprises expect RCEP to bring new opportunities and benefits, but also acknowledge challenges such as market access and industrial competition.
• Survey Highlights: The survey revealed that Chinese enterprises are more active in investing in ASEAN, while ASEAN enterprises are more open to Chinese investment.
• Challenges: Market access restrictions, lack of international talents, and complex legal and standard environments are major obstacles to investment.
• Support Needed: Both sides need support in the form of tax incentives, regulatory transparency, market openness, and talent development to enhance economic and trade cooperation.

Conclusion

The China-ASEAN economic and trade relationship has developed into a robust and mutually beneficial partnership over the past 30 years. Enterprises from both regions express confidence in the future of this cooperation and see significant opportunities in the ASEAN market. RCEP is expected to play a key role in deepening this relationship. However, challenges such as market access and operational experience remain, and addressing these will be crucial for the continued growth and stability of the China-ASEAN economic and trade cooperation.