Zhang Yunling, one of the architects of China ’s new strategy, and Tang Shiping have described the aim as: ‘to make China a locomotive for regional growth by serving as a market for regional states and a provider of investment and technology’. [899] The most obvious expression of this has been the way in which, in less than a decade, China has become one of – if not the – most important market for many countries in the region: in a few years’ time, it seems likely that it will be the single largest market for every country in the region. For the ASEAN countries, the Chinese market is now three times the size of Japan ’s. [900] No country – not even Japan, whose trade with China has recently overtaken that with the United States – can afford to ignore the Chinese market, or, as a consequence, China. [901] Since 2000 China ’s imports from ASEAN have increased at an annual rate of 30-40 per cent. [902] China, for example, accounted for 13.2 per cent of Singapore ’s exports in 2001, compared with 2.5 per cent in 1993, 18.5 per cent of South Korea ’s exports in 2001, compared with 6 per cent in 1993, and 9.2 per cent of Australia ’s exports in 2000, compared with 6 per cent in 1994. [903] It was widely feared in South-East Asia that Chinese imports from the ASEAN countries would be overwhelmingly comprised of raw materials. Certainly these are very significant, a case in point being the huge Chinese demand for timber, which is rapidly stripping the Indonesian forests. [904] The most important single category of ASEAN exports to China, however, is composed of intermediate goods. China is where the final assembly of many products of foreign-owned multinationals (American, European, Japanese, Taiwanese and South Korean) takes place prior to their export to their final destination. Countries like Malaysia and Thailand thus occupy a crucial niche in a complex division of labour centred on China. [905] In addition, China is assuming the role of an increasingly important investor in the region, with a large quantity of investment aimed at the extractive industries and infrastructure like railways, toll roads and refineries, in order to speed the flow of natural resources to the Chinese market. In 2002, 60 per cent of China ’s total foreign direct investment was directed towards Asia, [906] making it by far the most important destination. As a consequence, Chinese investment in South-East Asia has helped to compensate for the decline in Western investment over the last few years.
Zhang Yunling and Tang Shiping have described China ’s regional strategy in the following terms: ‘participate actively, demonstrate restraint, offer reassurance, open markets, foster interdependence, create common interests, and reduce conflict’. [907] With one bold and unexpected stroke, China has succeeded, in the manner of Deng Xiaoping, in redefining the dynamics of the region and, in the process, given itself more space for its own economic development. For sheer courage and unpredictability, China ’s East Asian initiative belongs to the genre of Chinese diplomacy initiated by Mao in the rapprochement with the United States in 1971. Even the intractable problems of North-East Asia are to some extent being redrawn by the ASEAN-BASED Chinese initiative, with both Japan and South Korea now involved in the creation of the East Asian Free Trade Area first proposed by the Chinese premier Wen Jiabao at the 2003 ASEAN+3 summit. It is impossible to predict the outcome of the process – or, more accurately, processes – now under way. They are open-ended and multi-layered, and could yet acquire another dimension, with the involvement of India and perhaps other South Asian countries in the future. [908] It has been suggested that one day there might be a fully-fledged East Asia Economic Union, perhaps even with a common currency, although the latter seems fanciful given the huge economic disparities across the region. [909] Nonetheless, the renminbi is likely to play a growing role in the region, especially if China further eases the restrictions on its use, as is likely over the next five years or so. In that eventuality, and assuming the dollar declines, the renminbi will increasingly be used for trading purposes, other countries in the region will peg their currencies to it, and in time it will surely assume the role of the reserve currency of choice in the region. [910] It is worth noting that in the zones around China’s borders – Myanmar, Mongolia, Laos, Cambodia and Vietnam – the renminbi, though not yet convertible, is already traded freely and used as a de facto reserve currency, sometimes instead of theUSdollar. [911]
