Regional economic integration benefits all
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, said Long.

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 years.

"The key words during the process are open and responsible," stressed Long.

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 regional stability.

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," Long said.

"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.

Executives' view

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 companies involved.

"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 people.

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 neighbours.

"Trade might have barriers among countries while the environment and healthcare are typical issues with no boundary restrictions," he said.

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 energy-saving technology.

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," Long said.

"Multinationals should play an active role here by providing information and incentives, as well as policy advice to governments," Long concluded.

(March 30, 2005)

 
Copyright 2004 by Chinadaily.com.cn All rights reserved.