A Bright Future for ASEAN and China

The rise of China, coupled with the establishment AEC from 2015, is expected to provide new catalysts for growth in ASEAN. Even with the use of fairly conservative assumptions in our economic projections (i.e. in most of our forecasts in this report, we assumed just half of the compounded growth rates seen in the previous period), the future of ASEAN is indeed promising. 

For instance, after 2020, ASEAN’s economy would be larger than that of the UK, and would overtake that of Japan by 2025. Domestic factors such as population growth and the rise in the middle income class in ASEAN will pave the way for AEC’s promise of an integrated production platform and market size, and to leverage on a region that is already outward oriented in its trade and investment. This will see ASEAN’s share of global total trade to rise from 6.7% in 2013 to nearly 8% by 2030, which is no small feat given that other larger trading groups such as EU will be seeing a dwindling share of global trade. 

At the same time, the shift in domestic conditions in China is propelling further outward orientation, which will result in closer integration and relations with ASEAN through trade and investment. These two channels could see ASEAN’s total trade with China rising to US$1.5 trillion and investment inflows from China rising to US$185 billion, from US$405 billion and US$36 billion, respectively.