At the end of 2002,leaders of China and ASEAN signed the Framework Agreement on China- ASEAN Comprehensive Economic Cooperation,agreeing to set up a free trade area in ten years. Although sugar is not included in the first 7,000 zero-tariff commodities,according to the objective of free trade,the protection article will be removed some day and China's sugarcane industry will suffer from the threat of cheap Thai sugar. Through analyzing the relative development in ASEAN countries,the opportunities and challenge brought about by the free trade area,the paper intends to propose suggestions for the industry to enhance the long-term competitiveness and efficiency.