Mumbai: China will establish a free trade area (FTA) with member countries of the Association of South East Asian Nations (ASEAN) by 2010, to help liberalise trade in goods and services among the South East Asian economies.

The two sides have signed an agreement to this effect following a 15th anniversary summit of the China-ASEAN dialogue in Nanning, capital of south China's Guangxi Zhuang region, a joint statement issued by China and the ASEAN said.

The FTA, when established, will have a trading bloc that encompasses a combined population of nearly two billion people and a gross domestic product of more than $2 trillion, The China Daily said in a report.

The FTA would cover China and six traditional ASEAN members Singapore, the Philippines, Brunei, Malaysia, Indonesia and Thailand by 2010 and by 2015 the FTA would be extended to Cambodia, Laos, Myanmar and Vietnam, the joint statement said.

The two sides have also agreed to expedite liberalisation of trade in services covering various sectors and promote mutual investment by creating a liberal, facilitative, transparent and competitive investment regime in China and ASEAN.

Chinese Premier Wen Jiabao, meanwhile, called for an expanded co-operation between China and ASEAN, including expanded military dialogue and exchanges, institutionalised defence co-operation and joint development of the South China Sea as per the 'declaration on the South China Sea.'