Fri, 05 Mar 1999

China trade may end the regional crisis blues

By Edward Neilan

BANGKOK (JP): China trade may be the engine of recovery for Southeast Asia's devastated economies, still reeling from what they see as Western-imposed globalization formulas.

Start with Thailand. The population here has eased over 60 million in the last year. Many new workers are involved in making low-end electrical items, computers and related parts.

The housing industry in China is immense and expanding with a scarcity of middle-income housing. Since urban incomes in China have been growing at about 20 percent annually since 1990, it means there is a demand for household furnishings which domestic production cannot satisfy.

Yit-fan Wong, chief economist for Southeast Asia of Standard- Chartered Bank, says Thailand will benefit from China's need to furnish new homes with imports of Thai electrical appliances.

China produces all such items but supply is uneven.

"For example, within the electrical appliances category there is an over-supply washing machines but not air conditioners. Washing machine parts may be available locally but a critical motor part has to be imported."

Wong says these "gaps and nitches" also exist in computer- related products.

Last year Thailand's largest sales to China were agricultural products such as rubber, rice and shrimp. sold through Chinatown as they have been for hundreds of years. The volume of these exports is increasing.

In 1958, when a boy reporter from Los Angeles first visited Bangkok, the bistro Chez Eve on Chinatown's New Road (it was "new" in 1858) was said to be the only air conditioned night club within 1,000 miles.

And it boasted the best hamburgers between Hong Kong and Singapore. So much for Western cultural commentary on a part of Bangkok that abuts the Royal Palace in all of its grandeur.

Besides agricultural products, the wise men of Chinatown have led development of mechanized agricultural equipment, which has a growing market in China.

The Bangkok Chinatown link to Silicon Valley is strong, with computers and parts comprising the second largest export sector to China last year.

It is not unusual to see a bright young Stanford or San Jose State graduate working in the head office of a Chinatown computer assembly factory.

Programming in Chinese is another promising field.

Thailand's petrochemicals are suffering from a severe glut in the region but again China may come to the rescue. China has cut back its own expansion plans for petrochemicals, having found it is cheaper to import.

Finally, Thailand's automobile industry may not export a lot of cars to China but it should still benefit from exporting auto parts, according to Wong.

If one of the main stories I encountered here was the expectations of China as a market for Thai products -- including Thai-made Japanese products -- the other is the depth of resentment against the West for its "help" in solving the so- called "Asian financial crisis."

Handing over Thailand's sovereignty will not solve the present crisis says Amarin Khoman, president of the Thai Star Group of Companies.

"We cannot afford the luxury of slavishly following disastrous doctrines which only serve the interests of foreign creditors and speculators, who take without giving," Khoman said. "There has to be an alternative to the current evils of market-driven globalized doctrines that reward only the creditors at the expense of debtors and innocents alike."

He is one of a number of businessmen who feel strongly that the International Monetary Fund's (IMF) admission that it made "mistakes" in proposing and overseeing draconian economic prescriptions have hardly been comforting to Thailand.

Khoman does more than point his finger at outsiders. "We must conscientiously adopt the rule of law and enforce it. We must seriously fight corruption and the increasing narcotics problem by providing the necessary funding and legal clout to the concerned agencies."

Khoman and others worry that unless the country addresses the issues concerning farmers and the rural poor, there is the risk of alienating the entire population and accelerating social upheaval.

The writer is a Tokyo-based analyst of Northeast Asian affairs and a media fellow at the Hoover Institution, Stanford University.