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China should play an important role to promote East Asian economic co-operation along with the rapid development of foreign trade and foreign direct investment (FDI) in China, said economists attending the China Development Forum.
East Asian countries have a common responsibility to institutionalize regional integration, and China should be at the centre of this movement, said Lee Kyung-tae, president of the South Korean Institute for International Economic Policy.
Compared with the European Union and the North American Free Trade Area (NAFTA), East Asia lags far behind in the development of a regional co-operation system, said Lee.
China is emerging as a major player in the East Asian community, with its rapidly growing trade and FDI.
"Under these circumstances, China's rapid development and East Asian economic development can only be harmonized if China plays a more affirmative role in building regional economic co-operation system," he added.
China's rapid development has had a great impact on the entire global economy in almost every way. In particular, due to their proximity to China, East Asian countries are in the middle of the global changes and transitions resulting from a rising China.
China's trade volume was US$38 billion in 1980, US$115 billion in 1990 and US$1.15 trillion last year. China's accession to the World Trade Organization accelerated this growth, with its annual growth rate exceeding 30 per cent after 2001.
"China has been the global assembly hub of many East Asian factories," he added.
In 2004, South Korea, ASEAN (the Association of Southeast Asian Nations) and Japan recorded their biggest trade surplus with China, while the United States and European Union recorded their greatest deficit.
China imports materials and components from the East Asian countries and then combines them with low-price domestic labour and advanced technology supplied by multinationals. The finished products are then sold all over the world, mainly to the United States and the European Union, Lee said.
China provides the biggest market for these East Asian countries.
In 1995, Japan's market provided for the East Asian countries was twice as big as China's. But China's market surpassed Japan's in 2003. China imported US$168 billion from this region, while Japan imported only US$152 billion from this area.
Lee noted China has already been playing a crucial role in promoting regional economic co-operation, actively initiating the China-ASEAN Free Trade Area (FTA) and participating in the South Korea-China-Japan joint study on a trilateral FTA.
However, China's direction in terms of FTA negotiations seems to be changing, Li worried.
Recently, China's FTA negotiation partners have mainly been outside the East Asian region, such as the GCC (Gulf Co-operation Council), New Zealand, Chile, Pakistan and India, Lee said.
Long Guoqiang, an expert from the State Council Development and Research Centre, said China's regional trade arrangements could be divided into two major categories: those made with neighbouring economies and those made with nations enjoying abundant supplies energy and resources.
Despite the new phenomenon that China tends to sign more trade arrangements with inter-regional and far-off economies, its neighbouring countries remain a focal point for China, Long said.
China will complete the mission earlier with East Asia as its trade relations with East Asian countries are closer, he added.
Diversified means will be used by China to develop regional trade arrangements with its neighboring economies, due to the big variations in their trade and economic environments.
(China Daily March 21, 2005)
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