China's recent diplomatic forays into South-East Asia are seen as vital to boost trade and investment in the region.

THE diplomatic visits by Chinese President Xi Jinping and Chinese Premier Li Keqiang to the South-East Asian countries in October have underscored expectations surrounding regional economy.

Experts and industry players in China believe that their visits have sent a positive signal and will boost bilateral trade and investment.

In his maiden official trip to South-East Asia from Oct 2 to 5, Xi visited Indonesia and Malaysia before attending the Asia-Pacific Economic Cooperation meeting, while Li went on a separate trip to Brunei for the East Asia Summit and then Thailand and Vietnam from Oct 9 to 15.

China-Asean Business Council executive vice secretary-general Xu Ningning said when mutual trust between China and the South-East Asian nations is enhanced, higher economic gains can be expected.

He foresaw enterprises to ride the wave and achieve greater development.

"Enterprises have their eyes focused on the business opportunities that will arise following the introduction of the upgraded version of China-Asean Free Trade Area (CAFTA).

"The markets will be opened up further between the two blocs, moving towards the target of achieving bilateral trade of US$1 trillion (RM3.1 trillion) by 2020 and two-way investment of US$150bil (RM475bil) in the next eight years," he said.

The initial framework agreement of the CAFTA was signed in November 2002, following an agreement to establish the FTA a year ago.

It came into effect on Jan 1, 2010, reducing duties of many products within the region to zero in the market that covers 584 million consumers in 10 Asean countries and 1.3 billion in China.

The policy of zero-tariff took effect in China and six original Asean members including Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand, and will be extended to the remaining four by 2015.

Xu is positive that the negotiations for the upgraded version of CAFTA would not take too long to reach an agreement.

"Perhaps China can take the lead to open up certain markets first before the negotiations begin. For instance, we can scrap the 8% import duty of coffee as there is a high demand for the commodity in China," he said.

Director of the Asia Pacific Research Centre in the China Foundation of International Studies Qi Jianguo, added that the visits by two Chinese top leaders to South-East Asia will inject confidence into the investors to pour money into the region.

"The amount of Chinese investment is lower in Vietnam, compared to Laos and Cambodia.

"While the regulations in Laos and Cambodia are relatively looser, we cannot deny that the South China Sea territorial dispute between China and Vietnam is an important determinant too.

"However, it is set to change for the better when the countries' leaders tackle the problem effectively," Qi, who is also former Chinese ambassador to Vietnam, said.

He pointed out that China and Vietnam have agreed to emphasise cooperation in fisheries and travel on South China Sea.

"Both reached an agreement to look at the issue with a new mindset. Instead of focusing on the territorial row, both parties will protect and develop the area together," he said.

China Building Materials Circulation Association vice-chairman Qin Zhanxue echoed Qi's view.

"We need to ensure that our investment is safe. Therefore, friendly ties should exist between the two countries before we bring in our money," he said.

He added that the association is encouraging the entrepreneurs in the field to expand their business to Asean countries.

"Since there is already a surplus of furniture showrooms here, investors can look at venturing out of the Chinese market and perhaps entering the local bourse.

"It will be a win-win situation when we set foot in the Asean countries. We will create job opportunities and invest in commercial property there while creating a new channel to market our products," he said.

Qin added that the investors can also purchase and process building materials, such as wood and minerals, in Asean, before importing them into China.

On the financial front, Qi highlighted that Xi proposed an Asian infrastructure bank to promote connectivity within the region.

"This shows China's determination in improving physical connectivity.

"The bank will address the financial problem in infrastructure projects and minimise investment risk," he said.

Meanwhile, China-Asean Investment Cooperation Fund chief executive officer Li Yao said the fund, with its headquarters in Hong Kong, targets sustainable investments that bring values to the community, besides financial benefits to the investees.

It focuses on infrastructure, energy and natural resources in Asean.

Li added that the fund is also exploring investment opportunities in East Malaysia, and would set up a liaison office in Kuala Lumpur in the next few months.

By THO XIN YI(thestar.com.my)

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