Wu Shicun

President, National Institute for South China Sea Studies

Vice President, China Institute for Free Trade Ports Studies with Chinese Characteristics 

December 22, 2020

Distinguished guests,

  

Let me begin by welcoming you to the China (Hainan)-ASEAN Think Tank Forum 2020.

    

Since its inception in 2017, the Forum has become an important platform for exchanges between thinks tanks from China, in particular Hainan, and ASEAN. Due to Covid-19, we cannot meet in person again in Hainan. But this dialogue mechanism should continue and the bond between us should not be loosened. It is hoped that, via video link, think tanks in China and ASEAN will continue to step up exchanges, contributing their share to deepened cooperation between the two sides.

In recent years, China and ASEAN have been deepening their cooperation in a wide range of fields and moving towards building a closer China-ASEAN community of a shared future. Due to Covid-19 and the trend of de-globalization, the world economy has plunged and global trade growth suffered. According to the projection of the WTO, global GDP will decline by 4.8% and global trade will drop by 9.2%. In contrast, economic cooperation and trade between China and ASEAN is faring exceptionally well. In the first half of this year, ASEAN overtook the EU and became China’s top trading partner for the first time. In the first three quarters of this year, China's direct investment in ASEAN totaled 10.72 billion dollars, up 76.6% year-on-year, while ASEAN’s paid-in investment in China reached 5.47 billion dollars, up 6.6% year-on-year. In addition, China and ASEAN have been working closely in fighting Covid-19 and promoting regional development. In this process, the two sides have deepened their consensus. China and ASEAN countries have jointly overcome the adverse impact of Covid-19 and ensured the steady progress of the Belt and Road projects as a whole. At the same time, there are quite a few highlights in their cooperation on joint epidemic prevention and control, medical supplies, and vaccine development and distribution.

At the same time, we are aware of the profound changes once in a century in the world, Covid-19 still raging around the world, and the less than optimistic recovery process of the world economy. In the post-Covid era, China and ASEAN will face many new problems and challenges in their cooperation. For example, Covid-19 has dealt a body blow to tourism cooperation. Compared with the more than 65 million passenger trips and nearly 4,500 flights per week between China and ASEAN in 2019, tourism and mutual visits virtually came to a halt this year. In addition, the South China Sea, which was stabilized with some positive signs, have seen some worrisome and unstable factors, posing a challenge for our efforts to enhance political mutual trust and cooperation on the sea. 

I’d like to take this opportunity to put forward some proposals on China-ASEAN and Hainan-ASEAN cooperation for your consideration:

   

1. China and ASEAN need to seize the opportunities after the signing of RCEP, by pushing forward cooperation under the framework of the 21st Maritime Silk Road.

First, China and ASEAN need to build a closer, stable and mutually supportive regional system of production and value chains. The signing of RCEP will further liberalize and facilitate regional trade and investment. (According to its provisions, RCEP will come into force with ratification by at least 6 ASEAN members and at least 3 countries from China, Japan, Korea, Australia and New Zealand). With this opportunity, while transforming and upgrading its traditional manufacturing industry, China will help ASEAN countries with labor and other resources receive industrial relocation from China according to market rules. Given the high industrial complementarity between the two sides, China and ASEAN need to step up the building of industrial and supply chains so that ASEAN countries can better integrate themselves into regional and global industrial chains, and regional economic integration process will move forward at a faster pace.

Second, China and ASEAN need to bring their economic cooperation and trade onto a higher level by exploring new growth drivers. We need to explore new frontiers such as digital economy and cross-border e-commerce. The two sides have conducted exchange and cooperation in the 2020 China-ASEAN Year of Digital Economy Cooperation. On this basis, they can conduct more bilateral and multilateral cooperation in digital infrastructure construction, digital economy technology solutions, and digital industry cultivation and talent training, in order to foster new growth drivers for the regional economy of China and ASEAN in the post-Covid era.

2. Exchanges between think tanks should lead support for decision-making, engagement with media, policy communication and consensus building between China and ASEAN.

As the platform for pooling wisdom and building consensus, think tanks have a full role to play in advising governments. In particular, to get along with the news trends in China-ASEAN relations, we think tanks need to offer theoretical and intellectual support which should be viable and professional for policy communication between China and ASEAN countries and the joint building of the 21st Century Maritime Silk Road. Consensus reached by think tanks can help governments reach consensus, rather than the other way around.

3. Cooperation on the sea under the DOC framework needs to be implemented in a concrete manner.

While steadily pushing forward the consultations on the Code of Conduct in the South China Sea (COC), China and ASEAN can deepen their consensus on the Declaration on the Conduct of Parties in the South China Sea (DOC). In cooperation on the sea and ocean governance, China and ASEAN can move faster in practical cooperation in low-sensitive fields such as marine scientific research and regional marine environmental management, build cooperation platforms and permanent cooperation mechanisms, and enhance mutual political trust. Given their current level of mutual trust, China and ASEAN can start with marine environmental protection and fishing resources protection as quickly as possible.

4. Hainan free trade port should become a new platform for China-ASEAN cooperation.

First, Hainan has a good foundation for cooperation with ASEAN. ASEAN has been Hainan’s largest foreign trade partner for years. In addition to economic cooperation and trade, Hainan and ASEAN can work together on cruise tourism, environmental protection, marine fisheries, people-to-people exchanges, medical education, connectivity of port facilities etc.

Second, Hainan can become a bridge for Chinese and ASEAN enterprises to enter the other’s market. With its favorable location and policies, Hainan can attract ASEAN companies to Hainan and on this springboard to the huge market of China’s mainland. In the other way around, it can also serve as a bridgehead for Chinese enterprises to go to the market in Southeast Asia.

Third, Hainan will become a connection between China's Guangdong-Hong Kong-Macao Greater Bay Area and ASEAN. Hainan is favorably located to connect and access the Greater Bay Area market and the ASEAN market. First, Yangpu port in Hainan can serve as an international transit port. Container routes can be increased between main ports in the Greater Bay Area and ASEAN countries to provide fast and efficient maritime transport services for the two sides. Second, we need to promote China-ASEAN negotiations related to multilateral aviation agreements. We should make good use of such preferential policies as seventh freedom rights and refilling jet fuel duty-free in Hainan free trade port, so that with Hainan as a major stopover point, air routes between China and ASEAN will be increased, and a China-ASEAN “economic corridor in the air” be built.