China to pose as tough competitor for ASEAN nations

China to pose as tough competitor for ASEAN nations

BANDAR SERI BEGAWAN (AFP): Southeast Asia must prepare for
tougher competition from China after the US Senate voted
overwhelmingly to normalize trade ties with Beijing, officials
said here Thursday.

The Association of Southeast Asian Nations (ASEAN) -- whose
key members have just emerged from a crippling financial crisis
-- must shape up to withstand competition in exports and drawing
in foreign investments, they said.

"China will in time become formidable in terms of
competitiveness. We have to adjust to that situation," said
Philippine Trade Undersecretary Jose Antonio Buencamino on the
sidelines of an Asia-Pacific Economic Cooperation (APEC) forum
meeting in Brunei.

U.S. senators voted overwhelmingly Tuesday to approve
legislation which will slash U.S. tariffs on Chinese exports in
return for China's pledge to open its market to US firms as part
of its upcoming entry into the World Trade Organization (WTO).

Market opening is seen to result in China adhering to
international rules such as the protection of intellectual
property rights and more transparency.

Kobsak Chutikul, director-general of the economic affairs
department of the Thai foreign ministry, said greater access of
Chinese goods to the US market and the opening up of its own
would hurt ASEAN exports and alter the investment landscape in
the region.

Export earnings have been a driving force in ASEAN's economic
rebound.

In the short-term, Thailand expects exports to fall about 1.4
percent as a result of increased competition from China.

"But in the middle and longer term, we expect that we will
gain. There will be more opportunities and benefits, we will gain
from expanded world trade," said Kobsak, who is attending the
meeting of APEC senior trade and foreign ministry officials.

China's population of 1.3 billion is larger than the combined
population of Thailand's four major export markets -- the United
States, Japan, the European Union and ASEAN.

"So there is enormous potential there. But we have to adjust
our industries and how we manufacture goods properly," Kobsak
told AFP.

He said the longer-term "danger" from China comes more from
the country offering a better alternative to foreign investments,
diverting funds away from ASEAN.

"China will draw in a lot of investments because of the huge
domestic market. Investors -- Americans, Europeans and Japanese
-- who have invested in ASEAN might now turn to China because
there will be more transparent rules and regulations."

The region should hasten the implementation of the ASEAN
Investment Area in order to withstand the competition from China,
Kobsak said.

"In this way, we will have a rather competitive investment
area of 500 million people within the ASEAN region with middle
income consumers. It's up to us to make our adjustments."
China's eventual entry into the WTO will be a boost to APEC,
Kobsak said.

"It has created a better atmosphere because China will be the
host of APEC next year. China is the world's biggest country so
it will give APEC added strength if it is fully on board (in WTO)
and actively participate in the process."

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand and Vietnam.
APEC embraces 21 economies on three continents bordering the
Pacific Ocean.