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Industries in China and Southeast Asia need to establish closer relations in order to benefit consumers and companis in their envisaged free trade area, a top trade official said Wednesday.

Xu Ningning, deputy secretary-general of the China-ASEAN (Association of Southeast Asian Nations) Business Council, said China-ASEAN trade has developed dramatically as a result of tariff reduction policies launched last year.

According to customs statistics, the trade volume between China and ASEAN countries topped US$116.3 billion in the first nine months of this year, up 23.1 per cent year-on-year.

Xu said that the China-ASEAN Free Trade Area (FTA), which is due to be fully established in 2010, "will increase the overall competitiveness of this area."

The FTA will be the world's largest free trade area. "That will attract enterprises from China and other countries to invest in ASEAN," said Xu.

He urged businesses in the two regions to strengthen their ties in order to take full advantage of the FTA.

"Through further opening up, businesses in South Asia can transform their industrial structure," said Xu. "This will further cut production costs in this region and form globally competitive industry chains."

He said that businesses in the two regions should work together to overcome problems in international trade. "For instance, shoemakers' associations in the two regions should join forces to deal with unfair competition in the global footwear market," he suggested. Many firms also need to improve their understanding of free trade in order to ensure that they fully benefit from it, stressed Xu.

"Many enterprises still do not understand what the China-ASEAN FTA means, and have yet to take full advantage of it."

For instance, many Chinese companies fail to complete "certificates of origin," introduced as a result of the Early Harvest Programme agreed between China and ASEAN in early 2005. This means that they are unable to take advantage of tax exemptions and reduced costs.

Xu also called for improved links between the two sides' industry associations. For instance, electronic products are the main items traded between China and ASEAN, but Western multinationals take over 61 per cent of the total trade value.

"That has brought risks to the trade between the two sides," he said. "If the world electronic industry does not perform well, that will directly influence China-ASEAN trade."

But the situation is already starting to improve, said Xu. Many Chinese industry associations, such as the China Association of Agricultural Machinery Manufacturers, have held forums with their ASEAN counterparts in order to strengthen ties.

"Co-operation between China and ASEAN is like a marriage. China and ASEAN first chose each other, and then we took steps to deepen the relationship," said Xu.

Mutual investment between China and ASEAN has risen dramatically in recent years. By March 2006, investment from ASEAN in China totalled US$40 billion, while growing numbers of Chinese firms are planning to invest in ASEAN member states.

ASEAN is the Chinese mainland's fifth-largest overseas trading partner after the European Union, the United States, Japan and Hong Kong.

China is now the third-largest trading partner of Singapore, Thailand and the Philippines, the second-largest of Myanmar and the top trading partner of Viet Nam.

China and ASEAN will deepen co-operation in 10 areas including agriculture, telecommunications, human resource development, mutual investment, tourism, energy resources and transportation, Vice-Minister of Commerce Gao Hucheng said earlier.