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Thursday, March 10, 2005
EAST ASIAN SYMPOSIUM
ASEAN sees the brighter side of Japan-China leadership rivalry
See the main story: A trade zone for East Asia's future
Southeast Asia sees China more as an opportunity than a threat, and the rivalry between Tokyo and Beijing for Asian leadership may be a welcome development if it keeps Japan engaged in the region, according to some panelists at the Keizai Koho Center symposium held Mar. 1.
"Increasingly, we regard China as a big market for Southeast Asian commodities and some of our manufactured products. Most of us in Southeast Asia do not have a common perception of China as a security threat for the region," said Michael Yeoh, CEO of the Asian Strategy and Leadership Institute in Malaysia.
China has taken the lead in offering, and concluding the initial phases of a free trade agreement with the 10-member Association of Southeast Asian Nations.
Behind ASEAN's enthusiasm about relations with China is the rapid increase in trade between the two sides, which reached $100 billion last year. China is also a major source of Southeast Asia's tourism revenue, especially in Singapore, Thailand and Malaysia, Yeoh said.
Malaysian Prime Minister Ahmad Badawi remarked during his trip to China in May last year that China is "an opportunity, not a threat."
Previously, the more prevalent view toward China was one of skepticism, especially among ASEAN members who compete with the emerging economic giant in export markets, according to the panelists.
In fact, many people in the Philippines are "afraid of China and about entering a free trade agreement with China," said Mario Lamberte, president of the Philippine Institute for Development Studies.
"Middle-income ASEAN countries like the Philippines, Thailand and Indonesia have striking similarities with China in trade structures, so we look at China as a competitor," Lamberte told the audience.
Over the years, some of the foreign direct investment that otherwise would have come to ASEAN countries went to China and supported its export boom, he said. China's accession to the World Trade Organization in 2001 improved its investment climate, adding greater competitive pressures on those ASEAN countries, he added.
"But there are also opportunities we can realize" and explore further through the FTA with China, Lamberte said.
Key export component
Lamberte noted how the key component of ASEAN's exports to China has shifted from primary goods to manufactured products in recent years.
During the 1990s, China consistently maintained a trade surplus with the Philippines, but the balance shifted in favor of the Philippines in 2002 and 2003, he said.
"Over half of the Philippines' industrial exports to China are electronics products, which presumably are inputs to China's manufacturing of IT products -- a sign of growing intraindustry trade between the two countries," he added.
ASEAN meanwhile still considers Japan as a key player in the region, and has a major stake in seeing Japan continue to grow and invest in Southeast Asia, the panelists said.
And the Japan-China rivalry for regional leadership may benefit Southeast Asia, in that such a competition will keep Japan engaged in the region, they said.
"Political tensions and rivalry between the two East Asian giants can both be a concern and at the same time a benign advantage to Southeast Asia," Yeoh noted.
Yeoh said he has observed a "benign neglect of Southeast Asia by Japan" in the first few years of the new century -- as seen in a decline of Japanese investments in the region -- until China announced its plan to create an FTA with ASEAN, which prompted Japan to follow suit.
"Here, I must say that Japan was caught sleeping on the job. If not for China coming out with a proposal for FTA with ASEAN, Japan would still have been a little slow," said K. Kesavapany, director of the Institute of South East Asian Studies in Singapore.
"But now it is making up for lost speed, reaching out to all the ASEAN countries," he said, referring to Japan's bid for its own FTAs with ASEAN as well as some individual members of the group.
Despite their rapidly growing economic ties, political relations between Japan and China continue to be on shaky ground. While Beijing frequently blames Tokyo over war history-related issues such as Prime Minister Junichiro Koizumi's visits to Yasukuni Shrine, Japanese leaders are becoming vocally wary of China as a military power.
Other symposium panelists warned that such tensions between the two countries will be an obstacle as East Asia moves toward closer economic ties.
"A favorable political relationship is necessary as a basis for further developing economic ties in the region. There still remain some Cold War ways of thinking, which will not be beneficial to the region's economic integration," said Zhao Jinping, deputy director of the Foreign Economic Relations Department at the Development Research Center of the State Council of China.
For an East Asian economic community to materialize in the future, there needs to be some form of an agreement among the key players in Northeast Asia -- Japan, China and South Korea -- on what the common benefits would be for the region, Zhao told the audience.
Suthiphand Chirathivat, chairman of the Economics Research Center and the Center for International Economics at Chulalongkorn University in Thailand, stressed the importance for Japan, China and South Korea to support the institutional architecture in East Asia.
Past history among the three countries, he said, points more to conflict rather than cooperation.
"If nothing is done, Northeastern Asian countries will continue to play a positive but limited role in East Asian process. . . . and we cannot go very far in terms of community building," he told the audience.
Simon Tay, chairman of the Singapore Institute of International Affairs, for his part said cooperation among these three countries "is essential but will be difficult."
More serious than historic issues is the present-day political competition, particularly between Japan and China, Tay said. Cooperation between the two will continue to be difficult, also given external factors such as the question of Taiwan and the role of the United States in the region, he added.
Therefore, Tay suggested, ASEAN -- despite being the smaller player in East Asia -- must play the leading role in the economic integration of the region through the ongoing "ASEAN-plus-one" process of simultaneously holding FTA talks with Japan, China and South Korea.
"East Asian cooperation can only happen if ASEAN is in some way involved (in taking initiatives for the process), and in this sense it must mean ASEAN-plus-Three, rather than Three-plus-ASEAN," he quipped.
While admitting that economic cooperation within ASEAN itself will continue to be difficult, given the lingering gap among its members, Tay noted that the group has "learned the habits of cooperation -- not so much of great economic union or integration -- but at least of not fighting openly . . . and I think we have something to share with the larger countries of Northeast Asia."
And that, in turn, would accelerate the ASEAN integration process, he said.
"When we talk to China, . . . to Japan and to South Korea, these much larger economies (in Northeast Asia) make the 10 ASEAN members realize that despite the diversity, they must integrate faster and cooperate more with each other, to be able to deal with the larger countries," he added. (T.K.)