Economic Cooperation between China and ASEAN: A Neorealism Perspective

[[abstract]]Regional economic integration has become an important agenda in world trade, particularly after the collapse of Doha Round?s negotiation. While skeptically viewed by many in the early stage, the free trade agreement between ASEAN and China, with a market size of more than 1.7 billion, is gaining momentum after the latter generously opening its door to members of ASEAN. Both ASEAN and China are the exporters of labor-intensive goods and compete directly in the global market. As both of them are more substitute rather than complement, thus it is difficult to understand the benefits of creating such free trade area by using trade theory alone. The purpose of this study is to examine the non-economic factors that prompted both parties, particularly China, so eagerly in promoting economic cooperation. Historically, security and economic influence in Southeast Asia is dominated by the US and Japan. Through the lens of neorealism, we found that China is utilizing its economic power in building relationship with its southern neighboring countries. A closer tie to China allows ASEAN to neutralize the dominance of the US and Japan in this region. Consequently, both parties benefited from this free trade agreement