The China–ASEAN Free Trade Area (CAFTA) became operational on January 1, 2010. CAFTA encompasses a population of 1.9 billion people, about one-third of the world’s total, and a combined gross national income of $6 trillion, about one-ninth of the world’s total. It represents the third largest free trade area in the world after the European Union and the North American Free Trade Area (NAFTA) in terms of aggregate economic size and the largest free trade area among developing economies.

Key Points

  • CAFTA is the largest free trade area among developing countries.
  • CAFTA encompasses trade, services, and investment.
  • CAFTA represents China’s first regional economic integration arrangement across countries.
  • CAFTA has been motivated by trade diversification for China and for ASEAN.
  • There are fears in ASEAN countries of competition from China.
  • China provides investment funds and lending facilities to fortify the free trade area.

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By Jiawen Yang, Elliott School of International Affairs, The George Washington University