How Far is East Asia away from Free Trade Zone?

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Last updated at: (Beijing Time) Tuesday, December 17, 2002

How Far is East Asia away from Free Trade Zone?

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Practicality

Recently some reports say, the clamors opposing the implementation of free trade zone with China are rising high from day to day in the regions of East Asia. The yells for protection will quite likely lead astray the efforts for establishing a closer trade relation between the ASEAN and China.

In view of the development trend of the world economy, the globalization is inevitable. However, in the light of the establishment of the free trade zones of the European Union and North America during the past 10 years, it's not difficult to find out that the integration of regional economy is a path that must be followed in the process of economic globalization.

Having undergone financial crisis, some Asian countries came to be more aware of the importance in forming an economic alliance in order to strengthen their own economic strength. In Nov. 1999, at the non-formal summit meeting for ASEAN 10 + 3, Singaporean Prime Minister Goh Chok Tong in behalf of the ASEAN countries proposed to China, Japan and the ROK for establishing an eastern Asian free trade zone.

At the fourth meeting for the leaders of eastern Asian countries held in Singapore in November 2000, concrete measures were put forward to promote the cooperation for the implementation of the Manila "Joint Statement on East Asia Cooperation", confirming the "Agreement on Currency Swap" signed between the ASEAN 10 countries with China, Japan and the ROK.

At the 10 + 1 meeting in 2001, Premier Zhu Rongji put forward three proposals: one being to determine the field of importance for cooperation between China and ASEAN countries, another to establish China and ASEAN free trade zone and third to strengthen mutual confidence and support.

A few years ago, the IMF and the World Bank named in a report the Chinese mainland and the other three independent tariff areas (Taiwan, Hong Kong and Macao) as "China Economic Zone". If putting together the GNP of the four areas across the straits the gross economic value comes to somewhere around 1.5 trillion US Dollars, an economic strength to be ranked the fourth of the world. The total import and export trading value comes to 1 trillion US dollars, accounting for 8.3 percent of the world total, ranking the 3rd of the world and next only to the US and Germany. As to the foreign exchange reserve, the Chinese mainland alone had surpassed 200 billion US dollars in 2001, if putting together the reserve of the other three areas it will exceed that of Japan to a great extent, being a country with the highest foreign exchange reserve of the world.

After "Sept 11 Incident" most of the Asian countries and regions saw a slowdown in economic increase with the US and other economically developed countries and regions even reduced to depression. In Asia the economy in Japan was landed in a ceaseless depression, causing the "migrating wild-goose pattern" with Japan at the head to fall apart. But on the contrary, China still kept on a steady development with its market showing a great potential. Since the middle of 1999, China has remained a No.2 country receiving direct foreign investment next only to the US in the world. And in the eastern Asia trading zone, the ASEAN has become China's 4th trade partner while China the 6th one for the ASEAN in the area.

Difficulties

But in view of the decentralization of products in these countries and regions, most of them see a concentration on certain products, such as on textiles and electronics, in exception of China and Japan that have set up a solid industrial system of their own. And in the regional trade, it also sees a high and low variation. Since 1990s, China's Hong Kong SAR and Malaysia have acquired a higher proportion in the regional trade than that of Japan, but depending to a greater extent on the US market.

However, judging from the total economic volume, China and Japan accounted for a major part of it and plus that of the four small dragons it has come to a greater majority in the eastern Asia, revealing a greater disparity in economy than that in Europe.

And in the fluidity of the production elements there are more restrictions with the people's currency remaining still not a freely convertible currency. Japan though with an open capital market but it enacted a very complicated restriction on foreign capital to access the companies in its homeland. Especially after the economic crisis many places took a circumspect attitude towards the capital flow.

In the making of economic policies the ASEAN countries bore a somewhat resemblance while other countries and regions were different due to different favors and tastes. China's Hong Kong SAR has its doors flung wide open, Japan tending to protect itself, Taiwan advocating competition among enterprises, the ROK favoring organizing large enterprises while the Chinese mainland is in the transitional period.

On the cultural aspects, though most of the eastern Asia countries bear a hue of the Han culture they have a great difference in religions. Most of the Malaysians and Indonesians believe in Islamism with the Philippines to believe in Catholicism. Between China and Japan, Japan and the ROK the historical problems are still shrouding over the countries with a strong national consciousness. The basis for economic cooperation did not last as long as that among the European countries. Besides, it has the APEC only to do the coordination work among them, and therefore, judging from the present situation the conditions for setting up an Eastern Asian Free Trade Zone are not mature yet the orientation is quite definite.

By People's Daily Online

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