TCS Daily

The Regional Leader?

By Rowan Callick - September 21, 2004 12:00 AM

World empires have risen and fallen, but East Asia as a whole has never been subsumed within any of them. It has always been an area of competing cultures and disparate rates of development.

Japan came close with its Co-prosperity Sphere in the 1940s. But for just that reason, it has since failed to attract support for moves towards converting the region into a yen bloc. Most recently, such a grouping was urged by Malaysia's then prime minister, Mahathir Mohamad, following the 1997 Asian financial crisis, but Washington effectively vetoed it.

Now, though, there are fresh calls for a regional structure that includes the 10 members of the Association of South-East Asian Nations and the economic superpowers of north Asia: China, Japan and South Korea.

There is already an "Asean plus three" construct that embraces them all, but this is a lowest common denominator arrangement that unrealistically, given the shift in economic clout towards north Asia, has Asean as the gatekeeper to the whole region.

Most of the new thinking about an East Asian grouping is different in having China, not Asean, at its centre, and in having Australia and New Zealand as likely members. Among those who have called for a regional arrangement are Mahathir's successor Abdullah Badawi, who says: "We have dallied long enough. We are punching way below our weight. We must enhance our voice, our weight and our role in the world of security, politics and in the realm of ideas, culture and values. If we are truly fortunate, if we are truly persistent, it will take at least two generations for East Asia to reach the European benchmark." He advocates a pact formalising an "East Asian community".

Former Singapore prime minister Goh Chok Tong, before stepping aside recently for Lee Kuan Yew's son Lee Hsien Loong, said: "China is already playing a key role in regional integration. Through its desire to have close and friendly ties with Asean, China has set the ball rolling, and has been the catalyst for Japan, South Korea and India seeking free trade agreements with Asean. China's manifest commitment to economic development stabilises the region. Its helpful and benign attitude towards smaller neighbours like Asean members is comforting."

The chief driver for this course from within China is its generously funded Boao Forum, headed by Long Yongtu, who led the tough negotiations that delivered China World Trade Organisation accession after 15 years. This forum is shaping up as Asia's rival to the Davos-based World Economic Forum.

Long said on a recent visit to Australia: "China's rise as a major economic power, and the dynamic process of regional integration", make Boao, with its annual leaders' summit, more important.

"I would like Australia to be part of the family," he said. The development of an East Asian group, alongside the European Union and the North American Free Trade Agreement, was "very logical and natural". But it was one "pushed more by market forces and economic realities than by political considerations".

What might this group look like?

Chinese Premier Wen Jiabao recently addressed 19 Asian foreign ministers at a meeting in Qingdao, China, where he listed areas where the region could start to coalesce: food safety, energy co-operation, fiscal and financial safeguards, environmental protection towards a "green Asia", disease control and co-operation in education and information technology.

This is more than wishful thinking. East Asia is swiftly becoming far more economically enmeshed. In dollar terms, trade between the nine strongest economies in the region grew more than fivefold from 1985-2001.

Since the 1997 Asian crisis, this trend has accelerated, with trade flows within the region growing much faster than those with North America and Europe, and with mutual investment starting to follow.

China is promoting multilateralism, mistrusted by the United States, as a way of reinforcing regional trust in its leadership.

Its leadership of the six-nation talks seeking to defuse the long stand-off over North Korea's nuclear ambitions demonstrates its growing appetite for such a role.

Rowan Callick is Asia Pacific Editor of the Australian Financial Review.


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