China thinks big picture at Southeast Asia summit

China thinks big picture at Southeast Asia summit

John Ruwitch Reuters/Beijing

Two deals that put meat on the bones of a free trade area in the making will be the most immediate rewards to come from China's participation in a Southeast Asian summit in Laos starting this week.

But for the world's most populous country much more is at stake in its calculated efforts to court the Association of South East Asian Nations (ASEAN).

For Beijing, cozying up to ASEAN is about guaranteeing regional stability so its brisk economic growth can continue, building confidence so that friends will remember which side they are on in China's 55-year-old spat with Taiwan, and fending off encirclement by the United States, analysts say.

"The Chinese are going piece by piece, but they have the endgame in sight," Ong Keng Yong, secretary general of ASEAN, told Reuters.

When Premier Wen Jiabao attends the 10th ASEAN summit in Vientiane, China will sign agreements with ASEAN on free trade in goods and dispute settlement.

The deals are a step towards a China-ASEAN free trade area that will bring into being a unified market of 1.8 billion people with a combined gross domestic product of US$2 trillion.

With China's booming economy and increasing dependence on resources and capital from beyond its borders, Southeast Asia is growing in importance. As a channel through which products are shipped to China, including oil, Southeast Asia is also key.

"You just have to look at the trade figures to get a sense of how important China is now for Southeast Asia. Ten years ago, China was not a market for Southeast Asian goods," said Jurgen Haacke, a Southeast Asia specialist at the London School of Economics and Political Science.

In the first nine months of 2004, China's trade with ASEAN countries grew around 35 percent from a year earlier. Trade between ASEAN and China would surpass $100 billion this year, Chinese Vice Premier Wu Yi said this month. China runs a trade deficit with Southeast Asia.

"Ten years ago, China was seen by most to be at least a potential threat, some saw it as an actual threat," Haacke said.

China has already signed a code of conduct in the disputed South China Sea and ASEAN's treaty on amity and cooperation. Both are seen as highly symbolic commitments to the region.

"What we see now is just a further move along the road which had already been taken by China-ASEAN," Haacke said.

Beijing has been willing to soft-pedal tough issues for the time being in return for a better image, said Liang Yingming, a professor of Southeast Asian studies at Peking University.

Case in point: disputes with several ASEAN countries over islands in the South China Sea.

"China's way of dealing with it now is to temporarily drop it and not pay attention to it," he said.

"I don't think the Chinese government wants to make relations with these countries tense over these issues ... For China, the priority is not on this issue. China's main problem now is in East Asia, especially Taiwan."

Of all Beijing's territorial disputes, none is more prominent or sensitive than Taiwan.