Asian countries nervous over China's WTO entry

Asian countries nervous over China's WTO entry

SINGAPORE (AFP): As the global community welcomes China's entry into the World Trade Organization (WTO), regional policymakers are nervously assessing how to cope with the Asian giant's irreversible economic ascendency.

China's WTO membership, now just a formality, is expected to escalate pressure on Asian countries to strengthen their competitiveness against the might of the Chinese industrial engine, regional officials and analysts said.

"Just as Japan was the 'world's workshop' after the Second World War, China is becoming the 'factory of the world' in the 21st century," Singapore's Deputy Prime Minister Lee Hsien Loong told a business conference Wednesday.

"China's entry into the WTO will hasten its integration into the world economy, increasing the pressure both on other countries and also on China's own long-protected and inefficient state-owned enterprises," he added.

In particular, the 10-member Association of Southeast Asian Nations (ASEAN), already reeling from a global downturn, faces the arduous task of working together more closely than ever before, said Bob Broadfoot, managing director of the Political and Economic Risk Consultancy (PERC).

"ASEAN needs to cooperate more regionally to lower tariffs and create a more unified market if it is to be seen as a credible alternative to the 1.2 billion (people) market of China," Hong Kong-based Broadfoot told AFP.

ASEAN, home to 500 million people, has come under fierce criticism, particularly for not doing enough in the aftermath of the 1997-98 regional crisis to closer integrate their economies.

ASEAN's members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

All are already committed to the ASEAN Free Trade Area, or AFTA, that will see the group's more developed members reduce tariffs on most goods traded within the region to between zero and five percent by 2003.

Singapore, one of Asia's wealthiest economies, is one of the most vocal in warning of the challenges that Chinese WTO membership will pose.

Lee Kuan Yew, the city-state's first prime minister credited for turning the resource-poor island into an economic powerhouse, has urged ASEAN members to forge bilateral free trade agreements to counter the growing clout of the Chinese economy.

Lee's successor Goh Chok Tong has described the rapid ascent of the Chinese economy as "scary" and said Singapore's "biggest challenge is therefore to secure a niche for ourselves as China swamps the world with her high quality but cheaper products."

But ASEAN secretary general Rodolfo Severino is more optimistic that the grouping can cope with the Chinese challenge.

"Southeast Asia has known that China will be entering the WTO from the beginning," he said by telephone from the ASEAN secretariat in Jakarta.

It is not going to be a one-way street as China will also be expected to lower its import tariffs in return for entry into the WTO and this should benefit ASEAN members, said Severino.