Enter the dragon - East Asia and Pacific: Chronicle 2002

New Internationalist, Jan-Feb, 2003 by Rowan Callick

This hunger for new, special economic deals followed immediately after China's accession to the World Trade Organization (WTO) in December 2001. It underlined the crucial significance for China's leaders of finding ways to keep the economy growing rapidly. For this is central to their legitimacy. After the Cultural Revolution had effectively destroyed ideological commitment to communism, the late Deng Xiaoping cut a new unwritten and unspoken contract with the Chinese people: we deliver ever-growing living standards, you let us rule undisturbed.

As the army of displaced and jobless workers grows -- reinforced by farmers as WTO entry starts to bite -- the pressure also keeps growing to attract new investment and to dominate new markets overseas. China has already strained its own environment beyond breaking point. Desertification now blights 28 per cent of the country and bans have been imposed on cutting further forests.

So Beijing's answer is to abandon former notions of self-sufficiency, and to use the nation's new-found economic muscle to import the raw resources it needs to fuel its growth. This, in addition to its determination to keep tabs on Taiwan, has driven it to boost substantially its presence in the Pacific. It has become a major player in Papua New Guinea's controversial logging industry, and is building its fishing capacity in the region too. It has a satellite tracking station in Kiribati.

China is also doubtless aware that the Melanesian nations are facing their gravest problems since becoming independent a quarter of a century ago. The Solomon Islands, now widely dubbed a 'failed state,' is worst placed: its government is unable to pay its health workers or teachers, and its militias still control parts of the country. Its bigger neighbour Papua New Guinea (PNG) removed 70 per cent of its MPs at its mid-year election but saw its economy slump even faster, with agricultural and resources outputs diving, its currency also plunging and the Government running out of both funds and options other than to borrow heavily. In the southern highlands -- PNG's oil- and gas-rich 'Texas -- elections were abandoned and warlords rule: a troubling version of the region's possible future.

The dislocation of the Pacific islands region from its Asian neighbours -- other than China -- and from the rest of the global economy continued. Although the 14 island members of the Pacific Islands Forum agreed to join a free trade zone over an eight- to ten-year period, inter-island trade is only two per cent. Attempts to switch to new crops have not lived up to early hopes. Kava, for instance, soared in Europe and North America as a cure-all herbal medicine for the 21st century, with $1,00 million new plantings. Then claims the herb was linked to liver disease resulted in bans.

Back in the 1930s and l940s Japan failed in its attempt to build an Asia-Pacific empire or 'co-prosperity sphere'. It is now China's turn to try. In late 2002, as it constantly worked to build allies, it forgave Cambodia and Afghanistan their aid debts. In the Pacific, too, its aid is becoming significant. On its way to building an empire of its own, it will ultimately drag the Pacific island nations closer culturally and economically to Asia.