Saturday, May 7, 2011

ASEAN-China Cooperation

Chinese Prime Minister Wen Jiabao's four-day visit to Southeast Asia has ended with success. In his separate meetings with Malaysian and Indonesian top politicians, all leaders had engaged in cordial and intensive communications and reached better mutual understanding and mutual respect. They had also relayed friendly and essential messages to each other. Given the time constraint, he was unable to cover more countries in his trip. However, it is believed that all Association of South East Nations (ASEAN) member states can feel the sincerity of the Chinese government.
The China-ASEAN Free Trade Area (CAFTA) has entered into its second year of implementation and in such a short period, it has made remarkable achievements. As the global economy is plagued by various turbulence and uncertainties, CAFTA has still managed to outperform other regions and maintain an impressive growth. We suppose Wen was impressed during his visit to this region. He will certainly establish more specific and feasible plans for the cooperation between China and ASEAN. Both the governments and private sectors of this region indeed look forward to it.
In the opening ceremony of the Boao Forum for Asia 2011 on 15 April, Chinese President Hu Jintao clearly indicated in his speech that China will strive to unleash the country's spending potential and increase its investment in Asia in addition to boosting its market potential in emerging economies.
Range of Flexibility
The members of CAFTA are virtually the direct targets of his pledge and they are in the forefront. Unleashing spending potential and enlarging investment in the Asian markets are actually the substance of the free trade agreement. Both parties of the free trade agreement will adhere to the agreement of zero or close-to-zero tariff in trade, service industry and investment, and this will naturally provide a wide range of flexibility. In the past one year, it has been proven that the exports of ASEAN countries have risen tremendously and new investment projects have emerged one after another in this region. Now China is going to take one step forward by unleashing its spending potential and enlarging its investment in Asia, it is not difficult to imagine the economic outlook and how it is going to benefit the development of various economies in this region. It is believed that Wen has brought a specific message in his trip to Southeast Asia. Are ASEAN countries ready to seize and fully utilize these opportunities?
Wen chose Malaysia, an ASEAN country that has close ties with China, and Indonesia, the current chair of ASEAN, as the destinations for his first foreign visit in 2011. His 30-hour activity-packed program in Malaysia and his policy speech in Indonesia have left profound impression in people's minds. This year marks the 20th anniversary of the dialogue relationship between ASEAN and China. The timing is commemorative while their success in maintaining such a good working relationship is also among the outstanding around the world. To be more precise, building and maintaining a good relationship and achieving regional economic integration within 20 years are results of highly effective works. With a population of 1.9 billion and $6 trillion Gross Domestic Product (GDP), the implementation of CAFTA will form the bedrock for the emergence of Asia. Is this not valuable?
Lack of Coordination and Unsustainability
CAFTA, which has started its operations for less than two years, is shouldering a tough and important mission of development. All basic member states of ASEAN are developing countries. Each of these economies are under tremendous pressure from the imbalance, lack of coordination and unsustainability in the face of their massive populations, inadequate resources and environmental challenges. They need to undergo tough tests in order to meet the standard and the best solution to overcome these problems is none but close cooperation with a sincere attitude.

The Chinese Government has stressed times and again that they will be 'a good neighbor and good partner to its neighboring countries forever.' Wen stressed to Indonesia, the biggest economy in ASEAN and also the current chair of the ASEAN, that 'We hope Indonesia can play an active and constructive role in the cooperation between China and ASEAN'. This is indeed a well-meaning bid.
12th Five-Year Plan
Investment is an instrument to vitalize economy and strengthen the ties between the two sides. As mentioned earlier, China has confirmed that it is going to increase its investment in Asia and emerging economies in international meetings. During his recent visit to Southeast Asia, Wen brought along the relevant issues or even investment projects that were already confirmed.
However, on the day Wen departed for his official visit, in the 5th Chinese Enterprises Outbound Investment Conference held in Beijing, a number of ministries and commissions under the National Development and Reform Commission announced that they will make joint efforts during the period of the 12th Five-Year Plan by supporting the corporate sector in matters related to finance, taxation, etc. They will amend the opening up strategy from emphasizing the inbound investment to coupling it with the outbound investment to expand the foundation for development. This measure is almost equivalent to a national policy package. It is noteworthy that ASEAN has an additional avenue to attract foreign investment following this development.
Wen Jiabao visited to Southeast Asia along with his concern over regional economic integration. His visit was well received and welcomed the various quarters. This is positive and meaningful to the 'emergence of Asia.' The continuously strengthened economic ties between China and ASEAN have become a valuable bedrock for the modernization of Southeast Asia.

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