Asia's growth pole<\/p>\n
\"Global manufacturing workshop for all kinds of products\",
\n\"industrial juggernaut\" and \"global economic superpower\" were
\nsome of the oft-quoted labels used by analysts at the East Asian
\nEconomic Summit in Hong Kong to describe the direction of China's
\ngrowing economic clout. Analyses of its astronomical economic
\nexpansion over the last 10 years were full of huge numbers,
\ncreating the impression that China's growth potential was
\nunlimited.<\/p>\n
China's potential to become Asia's growth pole surfaced as
\neconomists analyzed the markedly changed global economic
\nlandscape after the Sept. 11 terrorist attacks on the United
\nStates that are pushing the world's largest economic powerhouse
\ndeeper into recession.<\/p>\n
Analysts say the September tragedy has made the U.S., the
\nlargest destination of foreign direct investment until last year,
\nmuch less attractive to investors. On the other hand, China,
\nalready the second-largest recipient of foreign investment, will
\nbecome much more attractive. But countries such as Indonesia are
\nconsidered less stable.<\/p>\n
Indeed, China, with a population of more than 1.2 billion and
\nper capita income of US$850, has been a magnet for foreign
\ninvestors as almost all kinds of product -- low- and high-tech --
\ncan be manufactured there at a fraction of the cost incurred in
\ndeveloped countries. Fast growth over the last decade has enabled
\nit to develop adequate basic industrial infrastructure --
\ntelecommunications, electricity and transportation.<\/p>\n
Official statistics show that China attracted $348.5 billion
\nin foreign direct investment over the last eight years and posted
\n$475 billion in foreign trade last year. It boasts a huge pool of
\nnot only low-cost but also highly skilled labor and claims to
\nproduce one million science graduates every year.<\/p>\n
Moreover, the source of its low-cost labor is considered still
\nmore than enough to support many thousands of new plants, as
\naround 900 million of its population still depend on agriculture
\nfor their livelihood. No wonder that some economists foresee
\nChina's economic potential growing to 10 times that of Japan,
\nwhich last year posted $4.75 trillion in gross domestic product.<\/p>\n
China, together with Japan, provided the latter's economy can
\npick up from its deep recession within the next two years, could
\nindeed become the main locomotive for Asia's economy. In fact,
\neven Japan, the world's second largest economy, South Korea,
\nTaiwan and Singapore have benefited greatly from China's dramatic
\neconomic expansion.<\/p>\n
Even if China's market is exposed to free international
\ncompetition after its entry into the World Trade Organization and
\nits development reaches such a level as to make its labor costs
\nless competitive, it will still be greatly alluring to large
\ninvestors.<\/p>\n
How, then, will Indonesia and other ASEAN countries, with a
\ncombined population of less than 500 million, be able to compete
\nwith China in attracting multinational corporate investors?<\/p>\n
Obviously, Indonesia is in an awkward position with regard to
\neconomic linkages with China, especially after the massive anti-
\nChinese violence in May 1998, and the continued targeting of
\nethnic Chinese businesspeople for their alleged collusion with
\nfamily members of former president Soeharto and with military
\norganizations.<\/p>\n
But as a group, the 10 countries of the Association of the
\nSoutheast Asian Nations could still be attractive for foreign
\ninvestors. The problem, though, is that multinational companies
\nhave not yet seen any significant progress in the process of
\nintegrating the ASEAN economies. Rivalries and demands for
\nexclusions from the tariff-reduction schedules were often the
\nmost prominent news emanating from ASEAN meetings.<\/p>\n
The diminishing role of the U.S. as the largest destination of
\nforeign investment, and the keener competition from China should
\njolt ASEAN countries to put aside their rivalries and hasten the
\nintegration of their economies into a large, common market.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/asias-growth-pole-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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