China-ASEAN Free Trade Area: Origins, Developments and Strategic Motivations

China's recent proposal to ASEAN countries of establishing a free trade area (FTA) between them has marked an important milestone in the development of China-ASEAN relations. This proposal has created strong academic interest and brought about contending views. This paper is a political study of the origins, developments and motivations on the Chinese side of the FTA, demonstrating its political, strategic, intellectual and economic basis. The events that shaped the FTA include the accelerated globalisation, the recent Asian financial crisis, the deteriorating Japanese economic performance, Chinas entry into the WTO, the 9/11 terror attacks on the United States and the reorientation in the U.S. security policy. This study concludes that the China-ASEAN FTA (CAFTA), if carried out with careful calculation and good co-operation, can bring about more benefits than losses to both sides. Otherwise, there will be losses where there shouldnt be.