Integration spurs Asian economies<\/p>\n
Zhu Qiwen, China Daily, Asia News Network, Beijing<\/p>\n
As regional integration becomes more important in economic
\nglobalization, closer economic cooperation benefiting both China
\nand its Asian neighbors is increasingly imperative.<\/p>\n
The remarkable progress that the European Union and North
\nAmerican countries have achieved in promoting regional economic
\nco-operation has served as a wake-up call to Asian countries,
\nespecially those who suffered bitterly from the 1997 Asian
\nfinancial crisis, after decades of booming growth.<\/p>\n
"It has become an Asian consensus that a framework is needed
\nto offset pressures imposed by enhanced European and North
\nAmerican regional co-operation," said Tang Min, a senior
\neconomist with the Asia Development Bank.<\/p>\n
A cooperative vehicle between the Association of Southeast
\nAsian Nations (ASEAN) and China, Japan and South Korea has been
\ndiscussed for the past few years as the key aspect to regional
\ngrowth. But various economic and political reasons have prevented
\nit from becoming reality.<\/p>\n
But in a surprise move, a free trade zone between China and
\nASEAN has been called for by China in 2000 and agreed to last
\nyear by both sides for implementation within the next 10 years.
\n"As an unprecedented plan of seeking common prosperity and
\ndevelopment, it is worth trying out," said Ding Dou, a researcher
\nwith the School of International Studies at Peking University.<\/p>\n
China and the ASEAN are now in the middle of negotiating their
\nfree-trade agreement, a move that will greatly enhance wider and
\ndeeper economic co-operation in East Asia. "Undoubtedly, China's
\nrobust economic growth and huge domestic market will contribute a
\nlot to regional growth and stability," said Ding.<\/p>\n
When the 1997 financial crisis swept across the Southeast and
\nEast Asia, China quickly became an anchor for Asian economies by
\nfirmly resisting tremendous devaluation pressure on its currency.<\/p>\n
And its 7.3-percent gross domestic product (GDP) growth,
\ntypical for the Chinese economy, effectively made China a star
\nperformer as global economic prospects dimmed last year.<\/p>\n
It is natural that many countries in Southeast Asia have
\nlooked to China for more cooperation.<\/p>\n
Now China's trade volume amounts to more than 40 percent of
\nits GDP, a ratio much higher than that of other major economies
\nlike the United States and Japan.<\/p>\n
And the average inflow of foreign investment worth more than
\nUS$40 billion per year accounted for 12 to 14 percent of China's
\ninvestment in recent years.<\/p>\n
"Among all its external markets, the Asian market is the one
\nthat the Chinese economy relies most on," pointed out Tang.<\/p>\n
That may seem incredible to many critics of Asian co-
\noperation, given the fierce competition for U.S. and European
\nmarkets between Asian exporters.<\/p>\n
Nevertheless, statistics from the Asia Development Bank
\nindicate that 57.7 percent of China's trade was conducted with
\nother Asian economies.<\/p>\n
China's entry into the World Trade Organization will certainly
\nfurther integrate this huge market into the Asian economy as well
\nas the world economy.<\/p>\n
Besides substantial economic benefits, a free trade zone
\nbetween China and ASEAN will also help cement the foundation for
\nstability in East Asia, wrote Ma Yanbing in the Beijing-based
\nquarterly, Peace and Development.<\/p>\n
China's free trade zone initiative is based on its diplomatic
\nand economic development needs, according to Ma, a researcher
\nwith the China Institute of Contemporary International Relations.<\/p>\n
"The realization of a China-ASEAN free trade zone will exert
\nfar-reaching influence on Asia and the world's global political
\nand economic situations," he noted.<\/p>\n
It is widely believed that sound relations between China and
\nits neighbors will allow the region to have a larger voice in the
\ninternational arena.<\/p>\n
To speed up regional cooperation, China has strengthened its
\nlinks with other Asian economies through investment.<\/p>\n
Chinese investment in the region remains modest in absolute
\nterms, but is accelerating fast. It was estimated that in 1999,
\nChina invested $72 million in ASEAN countries. In 2000, that sum
\nsoared to $108 million, up by 50 percent.<\/p>\n
Intensified financial co-operation is also a factor. "There is
\nnot much talk about Asian financial co-operation right now, but
\nit definitely will become a hot topic in future," said Tang.<\/p>\n
As large part of regional economic co-operation, financial
\ncooperation has already been put on the agenda of many Asian
\ncountries. The controversial plan for an Asian Monetary Fund as a
\ncountermeasure to future financial crisis in this region, though
\naborted, was a positive response to the call of many Asian
\neconomies.<\/p>\n
With a total foreign reserve worth about $1 trillion, Asian
\neconomies still have much to do to strengthen regional financial
\nstability.<\/p>\n
As preparation, a series of currency swap agreements have been
\nsigned between a number of Asian countries aimed at providing
\nprotection against financial crises.<\/p>\n
The latest case is the yen-yuan swap deal sealed last week
\nbetween China and Japan that requires each to support the other's
\ncurrency with their own currency worth up to $3 billion when
\nspeculative attacks occur.<\/p>\n
Economic globalization that brings more competition has made
\ncloser regional co-operation an urgent need for Asian economies.<\/p>\n
"But due to different political systems and economic
\nconditions, East Asia can hardly develop an institutionalized
\nintegration organization like the European Union and the North
\nAmerican Free Trade Area," said Ding, of Peking University.<\/p>\n
"In line with their actual conditions, East Asian economies
\ncan develop flexible and open regional economic co-operation,"
\nsuggested Ding.<\/p>\n
That means that while boosting trade and investment within the
\nregion, Asian economies also deepen their participation in the
\nglobal economy by diversifying export markets and foreign
\ninvestment sources.<\/p>",
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