Obsession with China fuels regional change
Sunday, November 24, 2002
columns.scmp.com
LIM SAY BOON
Three separate sets of headlines involving members of the Association of Southest Asian Nations (Asean) in recent weeks speak of the pace at which regional developments are being driven by an obsession with China.
Ostensibly, the developments are unrelated: the rush for free-trade agreements (FTAs) with the region; the agreement between China and Asean on conduct in the South China Sea; and the leadership succession in China. But look closer and the individual pieces coalesce into something bigger that speaks of the intense competition for economic and political space in what historically has been China's sphere of influence.
It also speaks of China's race towards economic superpower status and Asean's fear of a reversion to the historical domination of the region by China.
Firstly, the massive coverage of the political succession in China may have diluted a powerful underlying message. There was a striking contrast between the intense focus on the issue outside China and the reported lack of interest in the matter within China. Unlike previous changes in political leadership, succession this time was calm and low-key.
One interpretation is that with the opportunities offered by capitalism, mainland Chinese are displaying the same nonchalance towards politics and intensity towards making money that characterises the diaspora in Southeast Asia and elsewhere. Another is that mainlanders are confident their leadership is single-minded about the pursuit of rapid economic growth and unlikely to be distracted by internal conflicts.
More importantly, China watchers largely agree that the new leadership led by Hu Jintao comprises mostly pragmatic technocrats, who are likely to be highly focused on the economy, rather than ideologues.
China's rapid transformation has resulted in an export growth figure of close to 30 per cent per year; 30 per cent growth in new construction; and car sales surging at an annualised rate of close to 80 per cent, reflecting the explosion of Chinese consumerism. The upshot is that this economy is now sucking in between US$40 billion and US$50 billion in foreign direct investments per year, while the amount flowing into Asean has slumped.
So, Asean finds itself caught between a rock and a hard place. It has found itself eclipsed economically by China.
As they say, if you can't beat them, join them. And that is what Asean did at the Eighth Asean Summit in Phnom Penh this month when it signed a draft framework agreement with China for the establishment of an FTA within a decade.
This was followed by a flurry of activity and headlines involving Japan and the United States. At the summit, Japan signed an integrated economic partnership initiative with the regional bloc.
Soon after, US Trade Representative Robert Zoellick appeared in Singapore to tie up loose ends for the signing of a bilateral FTA with Singapore next year.
But the US has bigger things on its mind than Singapore.
The main attraction for the US of an FTA with Singapore is that it sets a model for other bilateral FTAs with other Asean countries.
Mr Zoellick then moved on to Manila for talks with Asean economic ministers on a "trade and investment framework agreement" that could lead to a network of bilateral FTAs between Asean members and the US.
The above activity was about trade, but trade, and FTAs in particular, is also about geopolitical influence. The Japanese have been concerned about their government's apparent indecisiveness in pushing an FTA with Asean. The Japanese press is not short of comments about the competition with China over Asean - and how their agreement with Asean was not as aggressive as China's FTA proposal.
The Japanese understand that China's FTA plan is about securing access to Asean resources to feed China's industrialisation and markets for its products. They also understand that it is about spheres of influence and geopolitical space.
Americans, for their part, also understand that if there is to be any "containment" strategy towards China, Southeast Asia is a key element, and China knows that, too.
So China played its diplomatic hand to reassure Asean by signing a Declaration on the Conduct of Parties in the South China Sea on the sidelines of that same Eighth Asean Summit in Cambodia. The idea of the declaration was to commit to acting with restraint in the event of disputes in the South China Sea and resolving such disputes through negotiation.
But Asean's discomfort about the awakened giant at its doorstep is unlikely to go away, so it will walk that fine line through trade and geopolitics.
As Singapore's Trade and Industry Minister George Yeo Yong-boon said early this month: "In the years to come, China will challenge the United States and the European Union as a great power. As we do not wish to be in a tributary relationship to China, Asean's most sensible strategy is to move closer to Japan, the US, India, Europe and Australia, even as we move closer to China. In other words, the precondition for a successful free-trade arrangement with China is free-trade arrangements with other economic powers as well.
"Conversely, all these other powers will also not want Southeast Asia to be allied exclusively to China. We are, therefore, seeing a healthy competitive dynamic where Asean seeks closer economic relations with everyone, and everyone wants Asean as a friend."
Lim Say Boon is a director of OCBC Investment Research in Singapore. The opinions expressed are his own. |
