Agriculture Reference
In-Depth Information
The agrcultural producton structure n ASEAN has experenced some
adjustments to match Chnese market demand. The TCI for ASEAN's exports
and China's imports in food and live animals (SITC0) rose from 1 in 1998
to 1.23 in 2005. The TCI for ASEAN's exports and China's imports of all
agricultural products also increased quickly—from 1.07 in 2001 to 1.48 in
2005. These trends demonstrate that the complementarty of ASEAN's
exports and Chna's mports has been ncreasng n recent years. Ths
mples that ASEAN could have undergone a structural adjustment n ts
agrcultural sectors n response to Chna's rsng status as an mportant
export destnaton for ASEAN's agrcultural products. Such an adjustment
has not, however, been witnessed in China—at least, not one as significant
as n ASEAN.
It should be relatvely easy for ASEAN to gan access to the Chnese
market durng the ntegraton of the two economes. The hgh and ncreasng
value of the TCI for ASEAN's exports and Chna's mports reveals the strong
market match between ASEAN and Chna: ASEAN s sellng what Chna wants
to buy. Therefore, the structural adjustment in agricultural production in
ASEAN (shown by the rsng TCI) should mprove ASEAN's capactes to grasp
the opportuntes provded by Chna's huge market.
The ntegraton of the two economes also provdes opportuntes for
other agrcultural exportng countres to ncrease ther exports to Chna
and ASEAN. The ACFTA will increase its member countries' competitiveness
in many commodities. There are, however, some agricultural commodities
in which China and ASEAN have no comparative advantage: for example,
cereals, milk, beef and raw materials. With income growth induced by the
ACFTA, demand for these commodities will rise, providing opportunities for
other countres. As for countres wth the same comparatve advantage as
China or ASEAN, they will confront certain challenges with possibly shrinking
export shares n the Chnese and ASEAN markets.
There also are some challenges for the tradng partners n the short
term. Although the ACFTA will assist both sides to exploit their comparative
advantage, it puts great pressure on those sectors with comparative
disadvantage. Some adjustments will be inevitable. For example, as China's
imports from ASEAN in tropical fruits increased quickly in recent years,
many Chinese farmers producing tropical fruits in coastal areas (that is,
