2012.10-Working Paper-China-ASEAN Relations in the Context of Inclusive Development

China-ASEAN Relations in the Context of Inclusive Development*
Qianqian LIU,1 Xiaolin Wang2

Abstract
　　Growth, poverty and inequality are three major challenges faced by China and ASEAN countries. Governments of China and Southeast Asian countries attach great importance to inclusive development and poverty reduction. Inclusive development implies that everyone should be involved in the process of development and share the achievements of development. In the international level, it also requires the inclusiveness of international relations between China and ASEAN, which, in particular, has political, economic and cultural meanings. Strengthening cooperation between China and ASEAN countries on inclusive development and poverty reduction helps build mutual trust between China and ASEAN countries, and therefore offers a breakthrough for China-ASEAN relations in general.
Key Words Inclusive Development, Poverty Reduction, China-ASEAN Relations

1. Introduction
　　Since 1991, China and ASEAN have been working closely on economic, political, and cultural aspects. Within the framework of the Strategic Partnership for Peace and Prosperity, China and ASEAN countries have gradually improved their relations. However, with the outbreak of 2008 global financial crisis and the America’s ‘return to Asia’, China-ASEAN relationship has been confronted with many new challenges. Stable economic growth and successful poverty reduction are common concerns of China and ASEAN countries. Promoting inclusive development between the two sides could be a key policy lever to further China-ASEAN strategic partnership. During the past couple of decades, China and ASEAN countries reduced the proportions of populations in poverty through promoting economic growth. However, the poverty reduction process in these countries is imbalanced. Some countries have great achievements whereas others are plagued by poverty and inequality. Continuous economic growth and equal development opportunities are the basic requirements to improve the quality of life comprehensively. In recent years, governments of China and other ASEAN countries have attached great importance to the strategy of inclusive growth and development.

　　Economic growth is aimed at boosting social development. Growth, poverty and inequality are interconnected. Impact of growth on poverty alleviation was known as "trickle-down effect" and later "pro-poor growth" and "inclusive growth". So far "inclusive development" has been given more weight. In its "12th Five Year Development Plan",
China highlights the transformation of its development pattern, which indicates a more inclusive domestic development strategy and foreign relations. Promoting inclusive development between China and ASEAN countries and accelerating regional poverty reduction and sustainable development through China-ASEAN Social Development and Poverty Reduction Forum are of great significance to a sound China-ASEAN strategic partnership for peace and prosperity.
　　In the second section, this paper discusses inclusive development from the perspective of international relations. In the third section, it analyzes the current situation of growth, poverty and inequality in China and ASEAN countries. In the fourth section, it gives a review and analysis of challenges in China-ASEAN relations. In the fifth section, several policy suggestions are given regarding China-ASEAN relations against the backdrop of inclusive development and poverty reduction.
2. Inclusive Development from the Perspective of International Relations
2.1. Definitions of Inclusive Growth and Inclusive Development
　　The concept of inclusive growth was based on ever deepening understanding of poverty. Classical economists believe that economic growth would ultimately benefit poor populations through"trickle-down effect" and it is the main driver for poverty reduction (Deininger and Squire, 1997; Dollar and Kraay, 2002; White and Anderson, 2001; Ravallion, 2001; Bourguignon, 2003). However, empirical studies show that not all economic  growth can contribute to poverty reduction. Only when economic growth sustains and brings benefits to all people, can extensive poverty
reduction be achieved. Bourguignon (2003) puts forward the triangle of "poverty-economic growth-income distribution", arguing that besides growth effect, income distribution is important to influence economic growth's role in poverty reduction. Kakwani and Pernia (2000) came up with the concept of pro-poor growth in their paper of What is Pro-Poor Growth for the measurement of growth benefits to poor populations. Ravallion and Chen (2003) proposed the pro-poor growth index. Kakwani, Khandker and Son adopted"poverty equivalent growth rate (PEGR)" to assess pro-poor growth.
　　Amartya Sen (1983) recognizes that traditional development economics give more priority to the growth of national output, gross income and total supply while neglecting "entitlement" and"capability". He believes that economic growth is only a means while development is the real goal. Development can be seen as a process of expanding the real freedoms that people enjoy and as expansion of entitlements. Poverty of entitlements is what limiting people's access to freedoms. To shake off poverty, equal entitlements and freedoms of all should be ensured. He advocates that social security should be improved by empowering people with economic freedoms and social opportunities. Therefore, according to his definitions of "entitlement" and "capability", only when entitlement to and capability of human development are secured can we realize inclusive growth and development.
　　The attention shift from GDP growth to income distribution is only the first step towards the right path of human development. Inclusive development is far beyond the domain of economics (Sen, 1983). Acemoglu and Robinson
(2012) argue that extractive institution is the reason why a nation suffers from poverty. With extractive institutions in place, citizens would lack equal opportunities and political entitlements. And lack of political entitlements makes it harder for people to expand their economic opportunities.　　

 　　Asian Development Bank (Ali and Son, 2007a, 2007b) conducted studies on the definition of inclusive growth and its measurement. They realized that inequality of opportunities played an important part in income inequality. In 2007, ADB revised its long-term strategic framework and formulated inclusive growth strategy. It is clear that
the concept of inclusive development is an enrichment of the concept of inclusive growth.
 　　The term of inclusive development has two parts:"inclusiveness" and "development". According to Sen, development is a process of expanding the real freedom that people enjoys. Inclusive development should be an institutional arrangement that eliminates social exclusion of racial and gender discrimination and ensures equal development entitlement of all for the comprehensive development of human being. Institutions of inclusive development should contain key inclusion that involves human development like economic, social, political, cultural and environmental inclusion.
 　　People's understanding of poverty has gone through three stages: income poverty, capability poverty and entitlement poverty. Correspondingly, their understanding of the relations between economic growth and poverty reduction is deepening as well. The pure pursuit of economic growth is gradually replaced by "pro-poor growth"
and further evolved to "inclusive growth" and "inclusive development".
 　　Inclusive development is a development pattern where development benefits are tricked down to everyone everywhere. It is about synchronized development of economy, society and humanity. In particular, inclusive development is more about giving equal development opportunities to the poor. Realization of social inclusiveness is both an ultimate goal and a process. Differentiation is a common characteristic in every society. However, it leads to social exclusion of some groups. So to realize inclusiveness, we should eradicate inequality and discrimination through social reforms.
2.2 Inclusive Development from the Perspective of International Relations
 　　Inclusive development often appears as a  socio-economic development theory. In nature, it highlights equal benefits of different members in different groups of society. It has more to do with the micro level of individual and society.
 　　Inclusive development can also be interpreted on a macro basis. At the national level, inclusive development can be interpreted as mutual benefit and win-win of countries in the international society. At the regional level, it means harmonious development of various regions and sharing of social development benefits. Nevertheless, widening South-North gap and especially the extreme poverty of some regions in Asia, Africa and Latin America signify that it is impossible for us to realize inclusive development and enjoy the shared fruits of development. In the final analysis, traditional development pattern, to some extent, is exclusive and limited.

 　　Before discussing interactions between China and ASEAN, two things need to be clarified. One is the current situation of social development and poverty in China and ASEAN countries. The other is the historical evolution of China-ASEAN relations.
3. Growth, Poverty and Inequality in China and ASEAN Countries
 　　Poverty reduction depends on economic growth and income distribution. Between 1990 and 2010, other than the two developed economies of Brunei and Singapore, 8 ASEAN countries can be divided into three categories based on their economic growth. First, there are high-growth nations represented by Vietnam with a 6% average annual growth rate. Second, there are moderate-growth nations with average annual growth rate at 3-5%, including Indonesia, Laos, Malaysia and Thailand, and Laos beats the other three with its 4.6% growth rate; Third, there are low-growth economies, such as Philippines(1.7%) and Malaysia(3.5%). Despite that, per capita GDP of Malaysia hit $13, 214 in 2010, so absolute poverty is eliminated in Malaysia. Different socio-economic development stages of China and ASEAN countries determine their differences in international division of labour. Facilitating trade between China and ASEAN countries can give full play to the comparative advantages of the two sides and allow them to benefit more from growth.
 　　Per capita GDP of China increased rapidly from $1101 in 1990 to $6819 in 2010, an average annual growth of 9.5%, enabling it to join the upper-middle-income countries club and become the second largest economy in the world. Rapid yet inclusive economic growth leads to large-scale reduction of poor populations in China. Poverty incidence ($1.25) rapidly reduced from 60.2% in 1990 to 13.1% in 2010. China's current effort of upgrading industrial structure will open the door of opportunity to international redistribution of labour between China and ASEAN and drive economic growth of East Asia.
 　　Between 1990 and 2010, ASEAN countries made tremendous achievements in poverty reduction. In particular, Vietnam and Indonesia stood out with their ratio of poor populations reduced to 46.9% and 36.2% respectively. In 2010, poverty incidence of the two countries decreased to 16.9% and 18.1% respectively. Thailand is about to eradicate ultra-poor populations who live on with less than $1.25 a day.

Table 1. The Growth, Poverty and Inequality in China and ASEAN countries

Note: ‘....’ indicates the data is not available.
Sources: World Bank Online Database

 　　Nevertheless, challenges remain. In Laos, there are still one thirds of populations living on with less than $1.25 a day, and Cambodia, one fifth. Ratio of poor populations in Philippines and Indonesia is as high as 18%. Therefore, poverty reduction achievements of ASEAN countries are imbalanced, as reflected by the imbalances among and inside nations. For example, poor populations in China mainly concentrate in western region while Indonesian poor mostly live in eastern region.
 　　China's income gap is widening with its booming economy. The Gini coefficient rose to 42.5 in 2010 from 32.4 in 1990. Some researchers estimate that China's Gini coefficient is now over 50. The widening income gap builds up huge pressure for social stability. Therefore, the Outline for Development-oriented Poverty Reduction for China's Rural Areas (2011-2020) identifies bridging development gaps as one of the priorities.
 　　Inequality is not that rampant in ASEAN countries. Three countries that are less equal (Gini coefficient) than others redressed inequality in the past two decades. Although Malaysia is the least equal nation with its Gini coefficient reaching 46.2, its National Development Policy (1990-2000) and National Vision Policy (2000-2010) implemented since 1990 have played an active role in reducing inequality. Substantial inequality in China and Indonesia deserve close attention of other nations when they are devising development strategies.
4. Review and Challenges of China-ASEAN Relations
4.1. The Historical Development of China-ASEAN Relations from the 1990s
 　　In 1991, China and ASEAN established diplomatic relations. The past two decades witnessed rapid development of China-ASEAN relationship. In simple terms, China-ASEAN relationship has mainly gone through the following stages.
 　　A. From the early 1990s until the outbreak of the Asian Financial Crisis in 1997-1998
 　　When the Cold War ended in 1990s, the power balance of international system changed dramatically. Especially after the Soviet collapsed, countries started to compete in overall national strength like economic development and scientific advancement in an increasingly multi-polar world, abandoning the traditional pursuit of polarization and military confrontation. Regional organizations flourished as well. In this background, China-ASEAN relationship began to recover and develop.
 　　On the one hand, bilaterally, China established or resumed normal diplomatic relations with all ASEAN countries. In 1990, China established diplomatic relations with Singapore. In 1991, China established diplomatic ties with Brunei. In 1990, China and Indonesia resumed bilateral relation that was suspended for 23 years. In 1991, China normalized bilateral relations with both Laos and Vietnam.
 　　On the other hand, overall China-ASEAN relations developed rapidly in this period. As early as in the mid-1970s, China recognized ASEAN as a regional organization, but it was not until 1991 that China and ASEAN established dialogue relations. In July 1991, Mr. Qian Qichen, then Chinese Foreign Minister, attended ASEAN-China Foreign Ministers' Meeting. This was the first time that China talked to ASEAN with the latter being a regional organization. In the following five years, China-ASEAN relations enjoyed fast progress in politics, economy and security. In 1994, China was invited to participate in "ASEAN Regional Forum", thus becoming one of the founders of the forum. Since then, dialogue between the two sides in regional security has begun. Two years later, in July, China became a comprehensive dialogue partner of ASEAN in ASEAN Foreign Ministers' Meeting held in Jakarta.
 　　During this period, China also cooperated with Vietnam, Laos, Cambodia, Myanmar and Thailand in sectors such as poverty reduction, transportation and energy sector.
 　　B. The Turning Point: the Asian Financial Crisis in 1997-1998

 　　The 1997 Asian financial crisis dealt a huge blow to East Asian countries. Southeast Asian countries were once facing grave disasters. Though confronted with huge economic pressure, China did not depreciate its currency or turn its back on the affected ASEAN countries. Its assistance to those countries through international organizations and bilateral channels was deeply appreciated. The financial crisis also ignited the strong desire of countries to promote regional cooperation. In a sense, Asian financial crisis was both a trigger of East Asian regional cooperation and integration and a turning point of China-ASEAN relationship. The financial crisis has three major impacts on East Asian countries as follows.
 　　First, East Asian countries were deeply dissatisfied with the behaviors of the International Monetary Fund (IMF) and the United States. The Asian Financial Crisis created a kind of ‘resentment’3 in East Asia against the IMF as well as the US (Higgott 1998). The inability of the US and other international institutions to help the region, to some extent, made East Asia states frustrated and offered an opportunity for East Asian states to seek an alternative way – a regional solution – to help themselves in the future. After the outbreak of the financial meltdown, in order to stabilize the economy of affected East Asian countries, IMF adopted three policy measures: tightening monetary policy; restructuring the financial system; and opening up economies. It's worth noting that those policy measures were exactly the same with those used to solve Latin American financial crisis. But Latin American crisis was mainly due to hefty fiscal deficits. Quite on the contrary, budget of East Asian countries was very low. The crisis was rooted in massive foreign debts of the private sector. It's obvious that IMF prescription was not right. Moreover, through IMF, the U.S. asked those countries to make more concessions and forced them to open domestic markets. Many of them were forced to remove restrictions on the proportion of foreign control over domestic financial firms and other industries. But in many affected East Asian countries, those policy measures actually worsened the crisis, making those countries further trapped in the financial crisis. Hence, they were awakened to see that those policy measures were actually reforms under the "Washington Consensus" system and represented interest of the U.S. and US-led IMF rather than that of affected East Asian countries.
 　　Second, the financial crisis made East Asian countries realize their close connections with one another. Economically, East Asian countries formed close trade and investment network and relied on one another in terms of economic development. But the reliance was bottom-up, and was mainly the result of spontaneity of the market mechanism. And it lacked institutional support and guarantee at the regional level, so was vulnerable and instable. Once crisis occurred, what happened in one country would soon be happening in other countries. Their united fates would lead to wider economic crisis. Therefore, East Asian countries hoped to put in place their own regional cooperation mechanism to recover economy and establish regional institutional support for the prevention of similar crisis in the future.
 　　Third, and most importantly, East Asian countries were brought home to regional awareness, or in other words, collective identity. Historically, the region of “East Asia” and which countries constitute East Asia were ambiguous. The Asian financial crisis provided East Asian countries including China and ASEAN countries with an opportunity to rethink their own identity. There was a sense rising from states in both Northeast Asia and Southeast Asia that they were in the same region and that was East Asia. Through the crisis, the East Asian states learnt to use a regional
approach so that they would deal better with similar problems in the future. One lesson learnt from the bitter experience of the Asian Financial Crisis was that it was necessary for the East Asian states to create a regional institution that was not dependent on the US.
 　　C. Regional Cooperation and China-ASEAN Relations after the Asian Financial Crisis (1997-2005)

 　　The ASEAN+3 Cooperation Mechanism emerged against this backdrop. At the 4th ASEAN+3
Summit in November 2000, Zhu Rongji, then Chinese premier, put forward the suggestion of establishing a free trade area (FTA). In March, 2001, China-ASEAN Panel was set up to conduct feasibility analysis of such a suggestion. In November, 2001, at the 5th ASEAN+3 Summit, China and ASEAN announced the plan of building China-ASEAN Free Trade Area within a decade.
 　　With the establishment of China-ASEAN Free Trade Area, relations between the two sides were deepened. At the end of 1997, China and ASEAN established partnership of good neighborliness and mutual trust oriented towards the 21st century. Right after the announcement of FTA plan, in October, 2003, at the 7th ASEAN-China Summit, China became the first non-ASEAN country to sign ASEAN Treaty of Amity and Cooperation. Then, China and ASEAN signed Joint Declaration on ASEAN-China Strategic Partnership for Peace and Prosperity. The Declaration served as an important strategic guidance for stable and profound development of China-ASEAN relationship in the
future. And this was the time when China-ASEAN relationship transformed from partnership of good neighborliness and mutual trust to strategic partnership. China is the first strategic partner of ASEAN, and ASEAN is the first regional
organization that China enters into strategic partnership with.
 　　In terms of aid, China canceled debts of Cambodia, Laos and Vietnam in 2002. China provided RMB190 million interest-free loans and RMB50 million grants to Laos for construction of the section of Kunming-Bangkok expressway in Laos. China also initiated Chinese-funded projects in ASEAN countries such as Thailand, Cambodia and Laos. In 2004 when tsunami hit Southeastern Asia, China provided disaster areas with funds worth of RMB520 million and $20 million. At the end of 2005, China announced that in the following 3 years it would provide 1/3 of its concessional loans for developing countries to ASEAN countries.
 　　D. Trade and Poverty Reduction have become the Key Focuses of China-ASEAN Cooperation (2006-2012)
 　　In January 2010, the China-ASEAN Free Trade Area (CAFTA) was finally established. It enables trade between China and ASEAN counties to occupy 13% of the world's total, making itself a huge economy that contains 11 countries in the region with a combined population of 1.9 billion and an aggregate GDP of up to $6 trillion. At present, the CAFTA is not only the world's most populous free trade area, but also the largest one among developing countries. China is now the largest trading partner of ASEAN, and ASEAN the third largest trading partner of China. The total trade between China and ASEAN grows rapidly. Trade facilitation has undoubtedly contributed to economic growth and poverty reduction in China and ASEAN members.
 　　Eliminating poverty to promote sharing of social development fruits is the common ideal of humanity and common task of China and ASEAN nations. In 2007, the First China-ASEAN Social Development and Poverty Reduction Forum" was held in Nanning. China and ASEAN nations jointly released Nanning Initiative, calling for concerted efforts to facilitate social development and poverty reduction in China and ASEAN nations with a view to realizing balanced development within nations and in the region. The launch of such a forum provides policy-makers, theory researchers and development practitioners in China and ASEAN countries with a platform for the sharing of social development and poverty reduction policies and experience.
 　　Cooperation on poverty reduction is incorporated into Plan of Action to Implement the Joint Declaration on ASEAN-China Strategic Partnership for Peace and Prosperity (2011-2015). In the five year plan, cooperation on poverty reduction mainly includes: 1. Enhance cooperation on poverty reduction, establish regular contact and policy consultation mechanism for competent authorities, continue to hold China-ASEAN Social Development and Poverty Reduction Forum; 2. Continue to hold a range of anti-poverty policy and practice symposiums for ASEAN nations, provide ASEAN members with academic degrees of poverty reduction and development and strengthening cooperation on human resource development; 3. Foster partnership through visits, knowledge sharing, information exchange and joint research; 4. Offer policy advices and technical support on request and participate in project designing and anti-poverty strategy-making.
4.2 Constraints and Challenges in China-ASEAN Relations
 　　China and ASEAN have opened new chapters of cooperation on economy, politics and security aspects. However it does not necessarily mean that there is no problems in their relations. Currently there are still many constraints which could hamper the development of China-ASEAN relations.
 　　A. The Competition between Different Aid Models in International Development
 　　After the Second World War, the structure of the international system shifted dramatically. Some developed countries disseminated universal values of the West through "development aid" and"Washington Consensus". However, over the past three decades, developing countries have been increasingly concerned with growth and poverty reduction. The waning "Washington Consensus" and increasingly powerful influence of the "China Model" get on the nerves of Western countries. Therefore, they whipped up "China Threat" to compete for a stronger voice. "China Treat" has been sprawling in Southeastern Asia. The Chinese government responds by adopting the Peaceful Development Strategy. In Southeast Asia, China's Peaceful Development Strategy is embodied by policies of good neighborliness and friendship. But still, many ASEAN countries tend to doubt China's regional strategic intent and fear China's economic revitalization. In recent years, the exact wording of"China threat" is not frequently found as before in official documents or government reports of neighboring countries. However, some ASEAN countries started to use words like "worry" and"concern" to express their anxiety.
 　　B. Similarities and Competitiveness of Economic Structure between China and ASEAN Countries
 　　China has similar economic development level and industrial structure with many ASEAN developing countries. Our economy is all dominated by agriculture and labor-intensive industries. At the same time, we all depend on the same third markets such as US, Japan and EU. China has grown into "the workshop of the world", whereas ASEAN countries have been losing many market shares in Japan and US since mid-1990s and especially since the beginning of this century. This is largely due to the overlap of the export structure between China and ASEAN export structure. Furthermore, foreign direct investment (FDI) is also an area of fierce competition. As early as in the early 1990s, ASEAN countries attracted over 60% of global FDI in Asian developing countries, while in the same period, China only received 20% of FDI. However, things have changed since the beginning of this century. China now has over 60% of FDI, whereas ASEAN countries only have less than 20% (Glossman and Brailey 2002).
 　　C. The Dispute of South China Sea
 　　The dispute of South China Sea is very thorny in China-ASEAN relationship. It cannot be solved overnight. Therefore, how to properly handle the issue without handicapping China-ASEAN economic cooperation and sound development is a common task of both sides.
 　　D. The Impact of US’ strategy of ‘Return to Asia-Pacific’
 　　Since 2009, the US has made a number of high-profile moves to return to Asia-Pacific region. For example, it entered into Treaty of Amity and Cooperation in Southeast Asia in 2009 and participated in East Asia Summit. Given the current situation, China and many ASEAN countries are not deliberately against American presence in this region. To some extent, US can act as a stabilizer and contribute to regional security. But it also brings with it more uncertainties to the sophisticated relationship in East Asia. Therefore, how to make full use of its presence in Asia and avoid its excessive intervention and manipulation in China-ASEAN relationship and regional affairs, and serve the interest of China and ASEAN countries are questions to be answered by China and ASEAN countries.
 　　E. The Interactions of Great Powers in East Asia
 　　East Asia (including Southeast Asia and Northeast Asia) is a region that includes different interests of many powers in the world. This region has two regional great powers, namely China and Japan, and many nations outside the region like the US. From 2005 when the East Asian Summit was established, India, Australia and New Zealand
were included in the framework of regional cooperation in East Asia. The interaction between the different states inside and outside the region raises the uncertainty for regional cooperation and China-ASEAN relations.
5. Policy Suggestions
 　　First of all, China and ASEAN countries should improve their political mutual trust and to promote inclusive development and poverty reduction. How to improve political mutual trust? The answer is through enhancing interaction, especially cultivating China-ASEAN common awareness. China needs to allow ASEAN to benefit from
China's economic rise, which conforms to the connotation of inclusive development at state-to-state level and can contribute to mutual benefit and win-win. In a sense, China-ASEAN FTA and especially the "Early Harvest" program
are excellent footnotes to such an outcome. The Chinese government hopes that through close economic cooperation China-ASEAN political relations could be enhanced. Meanwhile, the South China Sea issue could be solved in a more harmonious and peaceful way. If the economic gap between China and ASEAN countries widen,
South China Sea issue would make small countries in Southeast Asia more concerned with China's rise. If Southeast Asian countries can ride on China's economic boom and benefit from it, their worries about China would be eased.
 　　Those are far from enough. It is true that the establishment of the China-ASEAN FTA has provided many ASEAN countries with more opportunities to enter into China's market, promoted development of trade and investment,
and bridged state-to-state wealth gaps of ASEAN countries and reduced proportion of populations in poverty. However, it does not necessarily mean that local people in ASEAN countries benefit from the arrangement. For example: ASEAN countries accuse China of investing in Southeast Asia in an environmentally-unfriendly way just for local resources. In addition, more and more Chinese domestic companies go abroad. Some of them did not have the awareness of corporate social responsibility. They cannot increase job opportunities and bring benefits to the locals. To some extent, it led to the dissatisfaction with Chinese companies and people and thus influenced China-ASEAN relations negatively.
 　　Therefore, besides economic cooperation, cooperation in social development and poverty reduction could be a new way to promote China-ASEAN relations. It is also a practice of inclusive development on the regional level.
 　　Facilitating anti-poverty cooperation between China and ASEAN countries offers a new breakthrough to deepen China-ASEAN relations. Poverty alleviation and development are mutual goals of both China and ASEAN. China is the largest developing country, which has achieved great progress in poverty reduction. It can offer many experiences for developing countries in ASEAN. Therefore, through exchanges, dialogues and cooperation on poverty reduction and fostering awareness of common interest and strategy help eliminate misunderstandings and concerns of Southeast Asian countries towards China. Meanwhile, it helps build mutual trust and thereby develop a more sustainable and stable China-ASEAN relations.
 　　Second, China and ASEAN countries should promote aid, trade and FDIs in order to achieve economic inclusiveness. In terms of trade, both sides should enhance coordination between China and ASEAN in trade facilitation. To the end, three aspects should be emphasized. One is to promote a unified regional standard for China-ASEAN Free Trade Area. The second is to increase the transparency of trade policies. The third is to expand the investment in infrastructure. In terms of FDIs, China and ASEAN should promote cooperation related to livelihoods and poverty reduction, such as agriculture and fisheries. In terms of aid, besides the traditional aspects of aid, such as infrastructure, China and ASEAN should emphasize developing the capacity of the poor. To the end, some of China’s experience in some African countries could be a good example. For instance, the International Poverty Reduction Center in China (IPRCC) aided the Peiyapeiya Community Service Center in Tanzania. It implemented a Community Development Demonstration Learning Project to enhance the capacity of the locals. Based on their own conditions and demands, China and ASEAN countries could design their own cooperative projects to build the capacity of the poor in both countries.
 　　Third, the mechanism of China-ASEAN Forum on social development and poverty reduction should be institutionalized. So far, the Forum has been held annually. However, the Forum should not merely be taken as a platform of idea exchanging. How to use the mechanism to promote the practices of China-ASEAN cooperation on poverty reduction will be of great significance.
 　　Finally, to achieve cultural inclusiveness, China and ASEAN countries should reinforce people-to-people communications and knowledge sharing in the field of poverty reduction. China and ASEAN countries should promote cooperation through various cooperation mechanisms such as ASEAN+3 and ASEAN+1 (China) and also the International Poverty Reduction Center in China (IPRCC). Both sides should hold international workshops, forums and seminars on development and poverty reduction so as to provide ASEAN developing countries with comprehensive technical support. In addition, efforts should be made to improve depth and capacity of research on anti-poverty cooperation, and to reinforce trainings and to promote academic exchanges. In doing so, China and ASEAN countries could deepen mutual understanding between each other.

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