ASEAN-China Economic Relations

Journal of Third World Studies, Spring 2008 by Curry, Robert L Jr

Saw, Swee Hock (ed.). ASEAN-China Economic Relations. Singapore: Institute of Southeast Asian Studies, 2007. 375 pp.

The book was produced under the auspices of the ASEAN-China Study Program that was launched in 2002 by the Institute of Southeast Asian Studies (ISEAS) in collaboration with the East Asian Institute (EAI) of the National University of Singapore. In 2006 a forum on ASEAN-China Economic Co-operation was held in Singapore and it resulted in Saw Swee-Hock's edited volume. As part of the Study Program, two previous treaties were edited by him and co-editors Sheng Lijun, Chin Kin Wah and John Wong: ASEAN-China Relations: Realities and Prospects (2004) and Southeast Asian Studies in China (2006). The current volume's focus is on evaluating the status, prospects and challenges posted by the economic linkages between China and the ASEAN group. While the forum's work provided the basis for eleven of the book's chapters, they were supplemented by four additional chapters that provide further insights. The volume provides readers with an excellent example of the collaborative work of the National University of ISEAS and the AEI.

The volume's foci general are on two-way trade in goods and services, foreign direct investment, energy cooperation and cooperation in developing the Mekong sub-region. Other topics include China's official development assistance provided to ASEAN countries, the development and maintenance of stronger business networks and well as strengthening the political dimensions of China's economic relations with Southeast Asian countries. Following the editor's introductory chapter, the book's fifteen chapters cover specifics analyzed by scholars whose backgrounds include studies of China and ASEAN. A strong components to the book are its extensive bibliography and its useful list of websites.

The volume's underlying theme is that China and ASEAN member countries share a symbiosis but that benefits are not equally shared. In his introductory chapter the editor contends that" With greater sense that ASEAN needs China in economic cooperation more than the other way around as China is the declared factory of the world, ASEAN may use the lop-sided situation in investment to bargain for more Chinese FDI. With its bulging trade surpluses and official reserves, China may be induced to recycle its FDI into tangible ASEAN projects are mutually beneficial as in energy and oil security and mainlining costs competitiveness." (p. 11) In addition, "More joint ventures can help to solve China's environmental problems or meet its demand for food, raw materials and intermediate products." (p. 11) Technical knowledge that ASEAN scholars and policy-makers can bring to China as it begins to confront some of its short and long term environmental issues could be extremely valuable. For example, China's penchant is to create large-scale infrastructure projects in the area of water supply often have very serious negative consequences. Beijing could use technical and scientific guidance from scholars who occupy positions throughout prominent ASEAN universities.

Another theme is that China and ASEAN are not essentially competing economies in the area of merchandise trade and that they tend to be "....highly complementary in their services exports, implying that ASEAN-China cooperation in investments would yield mutually beneficial results. Given that there is a great deal of intro-industry trade in goods and a high level of complementarities in services, the ASEAN countries should push for coordination of their investment policies for the goods and services sectors covering those areas where there is a high level of intro-industry trade." (p. 222) Coordinated investment policies that lessen obstacles to intro-industry trade "...will make it easier for Chinese and ASEAN investors to allocate the different stages of production and distribution activities in these sub-sectors." (p. 222)

Because of economic symbiosis, non-competitiveness and complementarities among ASEAN countries and China, negotiations have been proceeding steadily but slowly on the establishment of an ASEAN-China Free Trade (ACFTA). Discussions began in 2002 and they continue to focus on ..."minimizing barriers and depending economic linkages, lowering costs, increasing intro-regional trade and investment, increasing economic efficiency, creating a larger market with greater opportunities and larger economies of scale for the business...and enhancing (the flow of)...capital and talent." (p. 91 ) However, none of the items on which ACFTA discussions take aim neither on potentially negative consequences such as the concentration and centralization of economic power. Nor have the discussions highlighted the need to police such power so that, for example, tainted and dangerous products are produced and traded on an expanded scale thoughtout the integrated region and beyond.

In a broad sense, "The roles of Beijing and ASEAN capitals, based on a foundation of peace and stability and in pursuing greater economic cooperation, could form the core of East Asian Community-building, as what Beijing hopes to achieve thought its "Ten 1 " initiative with ASEAN. The Ten 1 mechanism falls short of being a full-fledged free trade area but it does strive to bring harmony and conflict resolution as a step forward forming such a community. ASEAN has moved toward creating the semblance of such a community via closer economic and commercial harmony with Japan and South Korea that, along with China, make up the membership of me "ASEAN 3" group.