The ASEAN-China Free Trade Area (ACFTA), also known as the CAFTA, is a free trade area among the ten ASEAN member states and China.
The initial framework agreement was signed on Nov. 4, 2002 in Phnom Penh, Cambodia, with the intent on establishing a free trade area among the eleven nations by 2010. The free trade area came into effect on Jan. 1, 2010. The ACFTA is the largest free trade area in terms of population and third largest in terms of nominal GDP, trailing the European Economic Area and North American Free Trade Area.
The free trade agreement reduced tariffs on 7,881 product categories, or 90 percent of imported goods, to zero. This reduction took effect in China and the six original members of ASEAN: Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. The remaining four countries will follow suit in 2015.
The average tariff rate on Chinese goods sold in ASEAN countries decreased from 12.8 percent to 0.6 percent starting Jan. 1, 2010. Meanwhile, the average tariff rate on ASEAN goods sold in China decreased from 9.8 percent to 0.1 percent.
On the pace of bilateral trade, the target of total trade hitting 500 billion U.S. dollars by 2015 is in full swing. China- ASEAN economic cooperation has never been more dynamic and fruitful, as China has become the ASEAN's largest trading partner and the ASEAN remains China's third biggest trading partner with an average annual growth rate of more than 20 percent and had grown 37 times over the past two decades, and the earlier trade targets were achieved ahead of schedule.
To date, China has invested a total of close to 13 billion U.S. dollars in ASEAN countries so they are obviously an important destination for Chinese investment.
China announced in 2009 that it would provide credit for ASEAN countries and set up a 10 billion U.S. dollars China-ASEAN Fund for investment cooperation.
So far, China has provided 12.2 billion U.S. dollars worth of loans to the ASEAN for infrastructure projects, such as bridges, roads, and power stations. And the ASEAN has become China's fifth largest export market for the service trade.