China goes to ASEAN meet to promote trade area
Posted: 5:11 PM | Oct. 02, 2003
Peter Harmsen
Agence France-Presse
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BEIJING--Plans by China and Southeast Asia to set up the world's largest free trade area, to be discussed at a summit next week, could benefit not only the two sides, but also foreign investors.
It is a somber moment for global trade as Chinese Premier Wen Jiabao prepares to leave for a meeting with the 10-member Association of Southeast Asian Nations (ASEAN) on Indonesia's Bali island on October 7 and 8.
Against the backdrop of failed World Trade Organization talks in Cancun, Mexico, Wen intends to push for a trade area that will combine China's and ASEAN's populations into a giant market of 1.7 billion consumers by 2010.
"Southeast Asia has been lagging and they need a kick," said Andy Xie, a China economist with Morgan Stanley in Hong Kong.
"And it means foreign investors no longer have to choose between Southeast Asia and China," he said.
So far, that choice has been mainly to China's advantage, as investors overwhelmingly prefer the vast, unified Chinese market with its coherent regulatory framework to the atomized markets of Southeast Asia.
Dato A. K. Majid, the Malaysian ambassador to China, tried to put a positive spin on the increased diversion of foreign funds into China, when he spoke to Beijing Review, a state-run weekly recently.
"This actually has affected our manufacturing industry, and some business opportunities that ASEAN used to enjoy are now also shared by China," he said according to the magazine.
"Malaysia doesn't view this as negative. Maybe this is a short-term challenge for us. In the long run, a growing China will contribute to our prosperity," he said.
Many Southeast Asian nations are extra eager to promote the trade deal with China as they were hurt more than most by the debacle at Cancun, given their dependence on agriculture, a top agenda item at the unproductive WTO talks.
With only seven years left to implement the plans for the China-ASEAN free-trade area, Beijing believes there is no time to waste in turning the project into reality.
"We hope that the negotiation process will be fast enough to catch up with the date of 2010," said Fu Ying, director general of the Chinese foreign ministry's Asian affairs department.
"It's already 2003, and we have only seven years to complete all the negotiations, so we have to work very hard to be able to catch that date," she said.
Reflecting this impatient attitude, China has been negotiating with ASEAN members to hammer out an "early harvest" of mostly agricultural goods whose tariffs would be dismantled ahead of the planned free trade zone.
ASEAN, which groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, is China's fifth-largest trading partner.
The organization's members accounted for 41 billion dollars of Chinese imports and exports in the first seven months of the year, giving China a trade deficit of eight billion dollars, according to Chinese customs statistics.
While China sees ASEAN primarily through an economic prism, it also eyes the benefits of intensified interaction in other policy areas.
China and India will be the first foreign powers to adhere to the Treaty of Amity and Cooperation, an ASEAN non-aggression pact, at the Bali meeting.
Premier Wen, whose domestic prestige got a huge boost from his personal attention to the SARS outbreak earlier this year, will also suggest the establishment of a regional monitoring network for epidemics while in Bali.
"Since we're adjacent to each other, there's a very heavy personnel flow," said Fu, the foreign ministry official.
"So there is a need to have closer cooperation among these countries to monitor the spread of epidemics and regional diseases," she said.
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