China Lays Out ASEAN Economic Plans
The Chinese premier, Wen Jiabao, has laid out the plans
for East Asia's economic integration at the ASEAN summit
in Vientiane. The plan effectively lays out a plan for
the nations of southeast Asia to sell their products and
raw materials to China as the leading consumer market
in the world. To use a Chinese phrase, China will become
the "head of the dragon".
In return for a guaranteed consumer market of 1.3 billion,
products and services will cross borders tariff free in
this new trade bloc. China will not interfere in the politics
of these nations, and will treat them as equals as long
as the energy and raw materials are supplied to China
on a steady basis. If these are somehow affected, then
the Chinese government will reserve the right to take
action.
By keeping silent, the ASEAN countries effectively accepted
the Chinese economic development plan.
China is not a member of ASEAN (Association of South-East
Nations), but is participating for the second time as
a partner. Japan is also a partner.
China-Japan relations are rocky because of continued
Chinese displeasure at Japanese prime minister Koizumi's
continued visits to the Yasukuni shrine, where Japanese
war dead, including Class A war criminals, are enshrined.
Koizumi continues to visit the shrine to placate his nationalist
right wing constituents, but increasingly, he is running
into heavy criticism from the business community, which
is heavily dependent on exports and manufacture in China.
The Chinese premier Wen Jiabao turned down an invitation
to visit Japan from Koizumi, saying that he would wait
for a more opportune time.
The Chinese plan is for ASEAN and China to become a tariff
free zone by 2010, but for the countries to retain their
own currencies. By 2010, the yuan will be a freely convertible
currency and intra-regional trade will most likely be
settled in yuan, replacing the US dollar, which has not
kept its value well recently.
Australia and New Zealand have cordial relations with
China, and China is now their single largest export market.
India is now undergoing dynamic economic changes, and
it will be interesting to see whether it will be drawn
into the yuan bloc.
Because so much investment money has gone into China
from Taiwan, the local economy has been significantly
hollowed out in certain sectors. Very soon, the calls
for Taiwan independence which come from certain segments
of Taiwan society will become irrelevant.
The nations of South America, especially Brazil,
are also heavily reliant on exports to China.
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