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.