ASEAN-China FTA plan gets ADB thumbs up
ASEAN-China FTA plan gets ADB thumbs up
Cecil Morella, Agence France-Presse, Manila
The Asian Development Bank (ADB) on Friday backed plans by China and 10 neighbors to create the world's largest free trade area (FTA), saying Beijing's growth engine could take up part of the slack in the United States, Europe and Japan.
China and the Association of Southeast Asian Nations (ASEAN) reached broad agreement at a meeting in Brunei on Tuesday in working toward the creation of the FTA.
Brahm Prakash, assistant chief economist of Manila-based ADB said Beijing was "emerging as a major engine of growth in the region," and that its formal entry into the World Trade Organization (WTO) this year would have a "positive impact" overall for Asia.
He predicted a "major restructuring of the developing Asian economies" over the next few years as China opens up its economy.
The ADB forecast Friday that the Chinese economy would grow by 7.3 percent this year, with the Sept. 11 terrorist attacks on the United States having a much more muted effect than in other countries "due to Beijing's relatively low dependence on exports and its strong domestic demand."
In its first full year of membership to the WTO next year, China's economic growth would be sustained at 7.0 percent, it added.
"Certainly, with the 2001 numbers, it would look like the world economy would grow by 1.0 percent and meanwhile developing Asia (would grow by) 3.4 percent," Prakash said.
Asked if the Chinese economy could be relied on to fill the void caused by the absence of growth in the major industrialized economies on developing Asia, Prakash said Chinese growth "is very important in terms of supporting" its neighbors' fortunes.
"It cannot totally replace the large economies like the United States, European Union and Japan," he added.
The proposed ASEAN-China FTA would cover two billion consumers, making it the biggest in the world according to population. The region has a combined gross domestic product of US$2 trillion, and two-way trade of $1.23 trillion.
Two-way trade has been rising steadily since the early 1980s, reaching about $40 billion last year, with China in deficit by $5.0 billion.
Meanwhile, the ADB said on Friday that while China's WTO membership would be positive in the long run, "adjustments to be made in the short term will have social costs.