Regional economic integration
Alexander Wan and Jian Er
China's rapid economic development is going to deliver real
benefits rather than pose threats to its Asian neighbours, including
ASEAN countries and Japan.
This point was forcefully made by Long Yongtu, secretary-general
of the Boao Forum for Asia, at the ninth China Daily CEO Roundtable
themed "China-Asia Business Partnership: Implications for
multinationals" held in Beijing yesterday.
At the conference organized by China Daily, Long pointed out
that economic integration in Asia is of strategical importance
for all countries in the region as well as those companies including
multinationals operating in this region.
This point was also echoed by some 30 China-based chief executive
officers and senior executives of leading multinationals, domestic
companies and international organizations such as BASF, Shell,
Pfizer Investment, BMW Group, British Airways, the Walt Disney
Company, Eastman Kodak, China Unicom and Clear Media, as well
as the Asian Development Bank, who attended the conference yesterday.
Focus on regional co-operation
China has become a very active participant in regional economic
co-operation and integration in recent years. The objective
of the initiatives is to let other Asian countries share the
economic achievements that China has made in the past decades,
The country has demonstrated its strong willingness and commitment
to regional integration such as establishing a free trade area
with ASEAN (Association of Southeast Asian Nations) countries
and proposing such an area with Japan and South Korea in recent
"The key words during the process are open and responsible,"
The former chief negotiator for China's resumption of GATT
contracting party status and its accession to the World Trade
Organization (WTO), Long said China's WTO membership and its
continuing spectacular economic growth had prompted the country
to switch from an conservative to an active approach to achieve
economic integration in Asia.
"China considered that its active participation in regional
integration could be interpreted by the international community
that China intends to become open and responsible. That's why
China started its long journey of negotiation on the establishment
of a free trade area with ASEAN countries," said Long,
who is now active in promoting regional economic co-operation.
Meanwhile, China also intended to deliver a strategically important
message that it wished to alleviate concerns among its neighbours,
including ASEAN countries.
The concerns, resulting from the rapid economic development
of China, included issues like China taking away their foreign
investment and jobs and the rise of China posing a threat to
It was reported that beginning this July, China and the ASEAN
countries will implement an agreement on the trade of goods
under their FTA pacts.
Tariffs on most goods flowing within the China-ASEAN FTA will
be finally cut to zero by 2010.
Figures from the Ministry of Commerce of China show that trade
in goods covered by an "early harvest programme" -
the prelude to an FTA - between China and ASEAN members, reached
US$1.7 billion by the end of last year, up 41 per cent year-on-year.
The "early harvest programme" exempts some products
from tariffs before the FTA is completed.
"So regional economic integration is a kind of sharing
that China wants to show its responsibility to create common
prosperity and development in Asia," said Long.
East Asia linking up
Long, a veteran in multilateral economic, trade and legal affairs,
continued that China, Japan and South Korea, whose combined
GDP accounted for about 90 per cent of the total in East Asia,
could play a more important role in this process.
Analysts expected China to lead a feasibility study for an
East Asian FTA this year.
The East Asian FTA, bringing together China, Japan, South Korea
and ASEAN member states, should be an exciting goal for China
and the entire region, although achieving this will not be a
simple task. China and South Korea started a non-governmental
FTA study two weeks ago.
"Without close economic co-operation among China, Japan
and South Korea, it could not be meaningful for East Asia economic
integration," he emphasized.
Specifically, China and Japan could make joint efforts in many
fields, such as energy, to work towards regional co-operation.
Long indicated that some misconceptions currently exist about
Sino-Japanese relations. For example, as many media have reported,
China is furiously competing with Japan as both are now the
world's major oil importers, both with massive demand for oil.
"I do not agree with that point of view," Long stressed.
"I am very optimistic about the overall relationship, especially
the trade relationship, because I now see that China and Japan
share much more in common than ever before."
Taking the energy sector as an example, Long said China and
Japan shared a lot in common, given that both are concerned
"about the production, exploitation, price stability, and
the safe transportation of oil."
"Despite some current political difficulties, I firmly
believe that China and Japan will become very close economic
partners in the long term, because of the demand of market forces
and the demand of economic integration in the region,"
"We should seek the common grounds of the two countries
and explore all possibilities to seek multilateral prosperity
and stability in the region," he stressed. "China
and Japan are mutually needed."
Long also added that the integration between East Asia and
South Asia is of equal importance in the region, and ASEAN countries
could act as a bridge between the two.
It was reported that a FTA feasibility study with Pakistan
is likely to be completed during the upcoming visit of Premier
Wen Jiabao to Pakistan in April.
Along with the completion of the joint feasibility study, formal
FTA negotiations are expected to commence during Wen's visit.
Reports said Pakistan and China have agreed on a summary regarding
the FTA, which comprises items that would get duty facilitation
ahead of the FTA and would be signed in April during Wen's visit.
Sharing the efforts to promote regional integration, Toru Shibuchi,
China country director of the Asian Development Bank (ADB),
said the ADB has been devoted to promote regional integration
in Asia through some trade-facilitation measures. He revealed
that about 20 agreements to simplify customs clearance would
be signed by six Mekong countries including Thailand, Cambodia
and Viet Nam.
Henry Wang, corporate planning director of Shell China, said
he totally agreed with the importance of regional co-operation.
Giving the chemical industry as an example, Wang said the promotion
of the use of clean energy such as natural gas and LNG (liquefied
natural gas) in Asian countries, including China, would help
achieve win-win integration and benefit the countries and the
"When it comes to regional integration, China could be
a major pool of talent in Asia," said Allan Gabor, chairman
and general manager of Pfizer Investment. Out of the 1,200 staff
in its research and development division, only four are non-Chinese.
Gabor's view was echoed by Peter Bowie, chief executive officer
of Deloitte China, the strategic partner of the CEO roundtable.
The company is planning to invest US$150 million in China in
the next few years, 60 per cent of which will be invested in
Meanwhile, Bowie said China should focus more on establishing
a sound financial system and free flow of services in the country
to help propel the process of regional integration.
Speaking of a country's responsibility during regional integration,
William Valentino, general manager of corporate communications
for Bayer Far East (Greater China), said government leaders
should pay more attention to healthcare and environmental issues.
For instance, the bird flu outbreak in Viet Nam has affected
the whole region, while pollution in China might affect its
"Trade might have barriers among countries while the environment
and healthcare are typical issues with no boundary restrictions,"
Echoing Long's view on China and Japan's energy co-operation,
Tadashi Ishihara, CEO and director of the board of Nissan (China)
Investment Co Ltd, suggested that China and Japan could work
together on advanced research and development projects like
Furthermore, William Lo, executive director and vice-president
of China Unicom Ltd, said he was familiar with integration as
it happened a lot in the telecom industry, and he had a distinctive
view on the issue. "Integration is a matter of time. It
does not come from the government's initiatives but from the
contribution of the private sector," said Lo.
Ying Yeh, chairman of Eastman Kodak Greater China Region, pointed
out that governments in Asia should consider more for the multinational
companies when formulating regional trade and economic policies.
"The business sector should be the primary force of the
process of regional integration, and integration would turn
into empty talk, without a contribution from the private sector,"
"Multinationals should play an active role here by providing
information and incentives, as well as policy advice to governments,"
(March 30, 2005)