Free trade with ASEAN, China's safety cushion<\/p>\n
Sheng Lijun, The Straits Times, Asia News Network, Singapore<\/p>\n
China's commitment to create a free-trade area (FTA) with
\nASEAN countries has attracted much interest among scholars and
\nbusinessmen. Leaving aside the economic rationale, how is one to
\nread the strategic motivations behind the move?<\/p>\n
It was China which first proposed the FTA. The Chinese concept
\ncan be traced to 1995, when Thailand proposed a special economic
\nzone between itself and China's southern provinces.<\/p>\n
The 1997 Asian financial crisis further spurred discussions
\namong Chinese scholars on a regional FTA. From 1999, the
\ndiscussions moved to the policy-making level, pushed partly by
\nChina's quest for ASEAN support in the aftermath of America's
\nbombing of its embassy in Belgrade.<\/p>\n
Chinese leaders decided in 2000 to \"strengthen cooperation\"
\nwith ASEAN, and this led to Chinese Premier Zhu Rongji's FTA
\nproposal. Several international trends and events have helped to
\nshape the ASEAN-China FTA. First, the accelerating globalization
\nprocess since the 1990s has promoted the concept of regionalism.<\/p>\n
Second, the 1997 Asian financial crisis forced some East Asian
\ncountries to question the wisdom of relying too heavily on the
\nWest.<\/p>\n
Third, China's entry into the World Trade Organization (WTO)
\nlast year -- to soothe ASEAN's worries of Chinese competition,
\nBeijing offered the FTA with early concessions for the less
\ndeveloped ASEAN countries.<\/p>\n
Fourth, the Sept. 11 terrorist attacks in the United States
\nresulted in pessimistic forecasts for the American economy.<\/p>\n
There was also much anxiety about the performance of the
\nJapanese economy. To encourage ASEAN states to put its eggs into
\nmore baskets, the booming Chinese market was held up as an
\nalternative choice.<\/p>\n
Fifth, the shift of attention on U.S. security from Europe to
\nEast Asia put more pressure on China to seek a more friendly
\nneighborhood in Southeast Asia.<\/p>\n
While forging an ASEAN-China FTA, China also strengthened
\neconomic cooperation with Japan and Korea at the same time.<\/p>\n
China also established the Shanghai Cooperation Organization
\n(SCO) with its neighbors in the north-west regions.<\/p>\n
It also intends to improve relations with India and build a
\nregional economic cooperation mechanism in the south-western part
\nof its border.<\/p>\n
In all this, China is constructing a safety cushion around
\nitself as a security measure, and is in a pivotal position to do
\nit.<\/p>\n
For China, the process of working for an FTA with its
\nSoutheast Asian neighbors is just as important as the outcome
\nitself. The fact that 10 ASEAN countries can sit down with China
\nto talk about an FTA is very important.<\/p>\n
This is the first time in Chinese history that it has found
\ncommon interest to engage all the Southeast Asian countries
\nconstructively to talk about cooperation, instead of quarreling
\non issues such as the rival claims in the Spratlys.<\/p>\n
This can thus be another form of \"political confidence-
\nbuilding\" for both sides. The FTA talks, expected to take 10
\nyears, mean that China has succeeded in getting the ASEAN
\ncountries to negotiate for a new economic framework.<\/p>\n
ASEAN countries will find it in their interest to engage China
\nconstructively and ride on the booming Chinese economy, while
\nthey make changes to meet the economic competition from China.<\/p>\n
China's behavior in Southeast Asia will likely be more
\namicable, and it will offer more economic concessions to ASEAN.<\/p>\n
Of course, China's offers will be based on pragmatic
\nconsiderations. ASEAN's share in China's foreign trade is only
\nabout 8 per cent.<\/p>\n
Even if Beijing makes more concessions to ASEAN, the economic
\nand political impact for China will not be as great as it would
\nbe with its major trading partners, such as Japan. The experience
\nof negotiating an FTA with ASEAN will provide valuable experience
\nfor China.<\/p>\n
For ASEAN, the FTA will enable member states to address the
\nchallenges posed by globalization. There is a growing realization
\nthat if ASEAN and East Asian countries do not step up trade and
\neconomic cooperation, they may be marginalized.<\/p>\n
The FTA may also help ASEAN to remain as a region of economic
\nimportance. Otherwise, more foreign companies will move to China.<\/p>\n
Engaging China in a constructive manner will also improve
\nASEAN's bargaining position vis-a-vis Japan, the US and other
\ncountries.<\/p>\n
In the light of perceptions that ASEAN is losing its
\ncohesiveness and relevance, China's offer of the FTA will enable
\nSoutheast Asian countries to demonstrate that they are still
\nplayers in the international trading system.<\/p>\n
And ASEAN may find niche markets in a booming China.<\/p>\n
The proposed FTA is likely to have an impact on ASEAN-China
\nrelations. No wonder that Japan is now prompted to forge closer
\neconomic cooperation with ASEAN.<\/p>\n
The writer is a senior fellow at the Institute of Southeast
\nAsian Studies.<\/p>",
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