China pushes for world’s largest free trade area

China's successful push to launch a free-trade area with 10 Southeast Asian countries by 2010 marks a new turn in Beijing’s approach to...

China’s successful push to launch a free-trade area with 10 Southeast Asian countries by 2010 marks a new turn in Beijing’s approach to booming East Asia, experts in international affairs have said.

The announcement earlier this week that China will help create the world’s largest free-trade area, covering 11 nations with about 2 billion people, brought no official response from Washington, which has dominated the region militarily and to a lesser degree economically since the end of World War II. The region has long been a market for California goods such as agricultural produce, electronic products, computers and machinery. The China-Asean pact announced on Monday in Vientiane, Laos, is already demonstrating impressive drawing power.

On Tuesday, Australia and South Korea, two of the Asia Pacific region’s most vibrant economic powers, and Japan, with the world’s second-largest national economy, declared that they, too, will begin negotiating to cut tariffs on the Asean nations. In addition, India said it will begin talks with Asean. Negotiations are expected to take as long as two years.

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Meanwhile, US academic and business leaders were digesting the draft agreement between China and its Asean neighbours and mulling its implications. Some US analysts see China’s rapid economic rise as a potential commercial and political threat to Washington, which already runs huge trade deficits with most countries in the region. Others view Beijing’s moves as welcome signs of a maturing power interested in stability and prosperity instead of Cold War-style saber-rattling.

For the 10 members of the Association of Southeast Asian Nations (Asean), drawing closer to China can be seen as a logical outgrowth of the US’ “single-minded focus on terrorism,” which has drawn Washington’s attention elsewhere, said Christopher McNally, a China expert at the East-West Center in Honolulu.

Moreover, while Washington sees terrorism as primarily a military problem, “Southeast Asian countries don’t quite see the world that way,” McNally said. “They see the major solution to terrorism as being development, and China’s growth plays into that. If Southeast Asia develops at the same pace and there is a lot of growth on both sides, that is attractive to Southeast Asia.”

For China, which has racked up 8 and 9 per cent annual growth in GDP in recent years, Southeast Asia is at once a source of raw materials, a market for Chinese manufactured goods, a source of investment in Chinese companies and a place for expanding Chinese companies to invest.

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“The China-Asean free trade agreement is simply the next step in a progression that began in the 1960 with the formation of Asean,” said Jeremy Potash, Executive Director of the California-Asia Business Council. — NYT

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