Asean officials believe sole option is closer ties with China

  • AseanPlus News
  • Monday, 29 Nov 2004

VIENTIANE: China would seem to be a scary neighbour for South-East Asian nations, with its roaring economy that is vacuuming up vital jobs and foreign investment from the region. 

But leaders of the Association of South-East Asian Nations (Asean) were shelving some of their anxieties about China's growing economic power and seeking closer ties with the behemoth during their annual summit opening in the Laotian capital today. 

Judging whether China is the region's friend or foe is not so easy. The Communist giant to the north is rapidly beefing its military with weapons that could be used to resolve simmering territorial disputes with Vietnam and others in the South China Sea. 

However, the Chinese have become big spenders and investors in South-East Asia. They are also aid donors who rarely publicly criticise troubled countries like Myanmar and Cambodia that are ostracised by much of the world. 

The 10 countries of Asean planned to adopt agreements with China to create the world's biggest free trade area by 2010 – a US$2.4tril (RM9.12tril) market of nearly two billion people. 

Parts of the pact to be signed today would begin cutting tariffs on goods by mid-2005 and create a system for resolving trade disputes. 

Some Asean nations and companies are worried the agreement will overwhelm them, said June Teufel Dreyer, a political science professor at the University of Miami in the United States. 

“Many South-East Asian states are worried about the advantage it will give big Chinese banks, big Chinese appliance manufacturers,'' Dreyer said. “Singaporeans are worried about competition for their big banks and high-tech industries.” 

South-East Asian officials at the summit said their only option is closer ties with China. 

“Whether we like it or not, we've got to trade with China,” said Winichai Chaemchaeng, director-general of Thailand's Trade Negotiation Department. 

Ong Keng Yong, Asean's secretary-general, denied there was any anxiety about China within Asean. The region must work harder to attract investors and adapt to the new competition from China, he said. 

“They'll always be there, Chinese imports, Chinese exports, Chinese businessmen, Chinese investors,” Ong said. “Just like we have a lot of Japanese, American or European investors.” 

Ong said the Asean-China free trade agreements would help make the market fairer. 

“We will try our best to avoid any of the ugliness or the rigors of fierce competition,” he said. 

South-East Asia has benefited from China's ravenous appetite for raw materials. The Chinese are running a trade deficit with the region –China's fourth biggest source of imports. 

Asean exports to China last year increased nearly 52% to US$47.3bil (RM179.7bil) from the previous year, the group said.  

Chinese exports to Asean last year climbed 31% to US$31bil (RM117.8bil) compared to 2002. 

Chinese Vice Foreign Minister Wu Dawei said China's trade with Asean would surpass US$100bil (RM380bil) this year, and this would be good for everyone. 

“China's development offers an opportunity to development in the region and to our neighboring countries instead of a challenge,” he said. 

But there is a downside for Asean. Investment dollars that could go to the region are flooding into China. The country sucked in US$392bil (RM1,489bil) in net foreign direct investment from 1994-2003, while Asean attracted US$147bil (RM558.6bil), according to Morgan Stanley. – AP  

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