China in WTO may shake Southeast Asia

China in WTO may shake Southeast Asia

KUALA LUMPUR (Reuters): China's graduation to World Trade
Organization (WTO) membership may prove a double-edged
development for its southern neighbors and could stir problems
for ethnic Chinese living in southeast Asia.

Kunio Yoshihara, a professor of Japan's Kyoto University in
residence at the Institute of Malaysian and International
Studies, said on Friday China's WTO accession posed dangers to
the region but added the threat should not be overdone.

"In the countries such as Malaysia and Indonesia where the
integration of Chinese to their societies has been difficult for
religious and other reasons, the rise of China as an economic
force will create problems," Yoshihara said during a public
lecture at Putrajaya, Malaysia's administrative capital on the
outskirts of Kuala Lumpur.

China is in the final stages of negotiating entry to the WTO
and is expected to become a member next year, if not this year.

"Chinese re-entry into the world market will raise the
relative importance of ethnic Chinese businessmen in southeast
Asia," he said.

Chinese language and culture would grow in importance along
with China's rising economic and political power, he added.

"More ethnic Chinese will become re-Sinocised, which may
create difficult political problems in the southeast Asian
countries where Chinese remain an ethnic problem."

Ethnic Chinese make up 30 percent of Malaysia's population,
where an affirmative action policy intended to boost the wealth
of majority Malays was implemented after bloody race riots in
1969.

Chinese in Indonesia represent some three percent of the
population, though resentment at their wealth has meant they are
often the target of racial prejudice and attacks during riots.

As far as trade issues were concerned, Yoshihara drew a mixed
picture of gains and losses for southeast Asian nations, setting
the benefits of greater market access for the region's primary
products against the northern giant's lure for foreign investors.

For Malaysia, this would mean increased exports of oil and
gas, fruit, palm oil, canned foods and petrochemicals, he said.

Foreign companies seeking long-term investment projects in an
environment free from endemic bribery and corruption would also
favor places like Malaysia over China.

But Malaysia's electronics and electrical manufacturing
capacity, centered in the northern state of Penang and
responsible for nearly 60 percent of exports last year, could
feel the pinch.

Yoshihara said Penang may be successful in retaining existing
foreign company investment from the United States, Japan and
elsewhere but may struggle for new money.

"When the U.S. economy booms again, probably (companies) won't
come back to Malaysia, probably they will go to China," he said.