China Prepares for Bali ASEAN Summit
China is preparing to sell the idea of an Asian free
trade bloc at the Association of South East Asian Nations
summit to be held in Bali on October 7 and 8. The Chinese
delegation will be headed by Chinese premier Wen Jiabao.
At the meeting, the Chinese will push for a trade area
which will combine China and the ASEAN countries into
a single trading bloc of 1.7 billion customers.
Although China is not officially a member of ASEAN, it
has become an important observer, and has regularly attended
ASEAN annual summits. Recently, India has also begun to
attend as an active observer.
The aim for China, at this stage, is to cut customs duties
and standardize regulations in the free trade area . Currently
there are no plans to introduce a central bank or unified
currency as in Europe. China wants to have everything
done by 2010.
The move comes as a backdrop to the failed Cancun
talks between developed and developing nations. Most
of the ASEAN nations are agriculturally dependent, and
were hit hard by the failure of the talks. As a first
step, China is pushing hard for the dismantling of tariffs
on agricultural products.
While China has enjoyed blistering growth this year in
spite of the SARS crisis, Malaysia, Indonesia, Thailand
and Singapore have all suffered economically for different
reasons. Indonesia has been hard hit by Islamist terrorists,
while the others have lost significant amounts of their
manufacturing capability to China. Unemployment in these
countries is high, and in many cases, they have fallen
back on agricultural and raw material exports to boost
their economies.
Surprisingly though, there is very little animosity directed
towards China at the lost manufacturing exports. Instead,
government officials in their public comments have said
that this is, more or less, the natural order of things.
In the first seven months of 2003, China has had a trade
deficit of US8 billion dollars with ASEAN on trade of
US41 billion dollars. In most cases, raw materials are
sent to China for processing and manufacture in Chinese
factories.
China and India, although not members, have agreed to
adhere to the Treaty of Amity and Cooperation, which binds
all ASEAN members to settle their disputes in a peaceful
manner. China and India have had a border dispute for
more than 40 years, but as economic relations have taken
precedence over politics, ties have improved.
During the Clinton administration, the US also participated,
sometimes at the presidential level. This year though,
the Bush administration and the US media have not even
mentioned the ASEAN summit, since it is focusing exclusively
on the war on terrorism.When it comes to Asian economies,
the Bush administration is putting all pressure possible
on China to let the yuan rise against the dollar, in the
hope that it will win votes in the 2004 elections from
laid-off workers who believe that China is to blame for
all their woes, and that if the yuan rises, all their
problems will go away.
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