Continued courtship – Chinese relations with ASEAN and its member states

Updated On: Jul 13, 2007

China has not been having an easy time lately with the international spotlight on its tainted products and its rising military expenditure. 

Strategic tie-ups between Australia and Japan under the auspices of Washington has meant Japan and Australia increasingly vocal in expressing “concern” about Chinese military power and using the latter to boost their own defence spending. The focus of Chinese attention (at least in the international media) is on Beijing’s love affair with African nations. But what about China’s own backyard in Southeast Asia? How is it doing?

Southeast Asian countries and China appeared to be still busy courting one another and cementing ties.  Chinese Vice-Premier Wu Yi led a 50-men strong delegation (including Commerce Minister Bo Xilai)  on a five-day visit to Singapore.  Singapore’s Prime Minister Lee Hsien Loong told visiting Chinese Vice-Premier Wu Yi that Singapore hopes that Beijing would agree to a free trade agreement (FTA) withChina. With the familiar Suzhou Industrial Park as a backdrop between the two countries’ negotiations in Singapore, the leaders of the two states brought up the 'eco-city' project to take the Industrial Park to a new level with Singapore providing environmental technologies for China. The Park's GDP grew by 18.8 percent to reach almost US$9 billion and it attracted US$1.6 billion in Foreign Direct Investment in 2006. 

By 2014, Park's service sector to the local economy has a target of reaching 40 percent, R&D spending constituting 5 percent of GDP and 75 percent of total industrial value created by hi-tech industries.  In addition, Business Process Outsourcing, such as call centres, accounting, and the development of software and product technology, will be given tax incentives to locate its facilities in Suzhou.  132 Singaporecompanies located in the Suzhou Industrial Park are expected to benefit from these initiatives. In addition, Singapore and China will be signing at least five memorandums of understanding in the areas of environmental and water resources, human resource development, as well as border health measures.

China is also keen to absorb some of Singapore’s implemented technologies for its own purpose. After touring the NEWater Visitor Centre in Tanah MerahChina's Commerce Minister Bo Xilai said China is keen to learn more from Singapore on how to manage water shortage, especially NEWater technologies. Mr Bo said: "It's good, I think. I think the taste of NEWater is very normal." Mr Bo said: "We are willing to learn from Singapore's experience in advanced water technologies. Singapore has been very successful in this area. Now, many people are discussing about the problem of oil shortage. But 10 years later, people will be discussing about the shortage of water. "So clean water is important to many countries, especially China, which has a huge population. We are in need of clean water. So we're very willing to discuss and tap on your experience."

For Malaysia, the courtship is the other way round with Foreign Minister Datuk Seri Syed Hamid Albar on an official five-day visit to China to strengthen  ties. "This visit comes at a very appropriate time, Malaysia-China relations have been very good, even at the leadership levels, for us to consider expansion programmes to broaden that relationship not only in politics but also in trade, economic and investment," he said. "We've no outstanding issues with China. For me, it's also a good opportunity to touch base with the new foreign minister. Since his appointment, I haven't met with him," he said.

Coded in the message is Malaysia’s yearning for China’s interest and investments in the Iskandar Development Region (IDR). "We're very fortunate that China is a big trading partner for Malaysia but Chinese investments have not reflected that potential. We're now very focused on the Iskandar Development Region (IDR) and other development authorities like in the north, east as well as in Sabah and Sarawakand would like to see more Chinese investments," he said. A recent visit by a Chinese trade delegation to Johor spearheaded by the China Council for the Promotion of International Trade and the recent Malaysia-China Business Council annual general meeting created a stir with regards to the IDR. "I think people feel there is good opportunity now," Syed Hamid Albar added.

Bilateral initiatives are not the only agendas on the table in ASEAN’s courtship of China. As a whole, Southeast Asian telecommunication regulators seek to forge closer cooperation with China during the 13th ASEAN Telecommunications Regulators Council (ATRC) meeting. "The meeting welcomed China's proposal for both short-term and long- term cooperation," so says the official report of the high-level conference. "The meeting agreed that both sides shall share more information on the regulatory regimes of network security. Both sides were of the views that further communications can be raised in the future," the report said. While pledging to work closer with China, ASEAN countries also agreed amongst themselves that they need to forge closer ties with fellow regulators to facilitate a critical exchange of information that will make ASEAN competitive vis-à-vis the Chinese economic juggernaut.

In Indonesia, the mood in courting China is slightly more ambiguous. Indonesia’s industries like its domestic cement manufacturers face severe challenges from low priced Chinese imports. China has approximately 1.6 billion tons of total installed capacity with sixty plants spread all over the country and actual production of 1.2 billion tons last year, accounting for as much as 46 percent of total world production and it exported around 33 million tons of cement last year, which is equivalent to Indonesia's entire domestic consumption!

Chinese cement imports are competitive as even after deducting cost, insurance and freight (CIF), it is as low as US$30 a ton compared with Indonesia’s average of US$72 per ton or the Philippines (US$88 per ton). Chinese cargo costs are even lower than these ASEAN countries. The reason for the low-cost Chinese cement is not labor costs as ASEAN countries like Indonesia has low labor costs as well butChina’s exceptional ability to replicate the most sophisticated energy-saving technologies for cement production that give rise to less wastage, greater efficiency and lower costs.  

While Indonesia frets about competition from China, it also wants to court China to learn from its developmental experience. "We admit that the family planning program in China is developing well and now we even want to learn from them (China)," Max Sopacua, vice chairman of the House of Representatives (DPR)`s Commission IX, said. Max reached this conclusion together with several Commission IX members along with the head of the National Family Planning Coordinating Agency (BKKBN) Sugiri Syarief and the secretary for social and cultural Affairs at the Indonesian embassy in Beijing, Arianto Surojo, after visiting a Family Planning Service Center in Fengtai District, Beijing. In contrast, Max noted that Indonesia was facing many limitations in implementing family planning programs, especially because it was constrained by considerations of traditions, cultures and religions as well as the geographical reach of the archipelago. "The family planning program has been regressing gradually since the advent of the reform era in 1998 and the introduction of regional autonomy," he said. 

In Jakarta itself, Indonesia's foreign ministry spokesman Kristiarto Legowo said: "Both sides [China and Indonesia] have expressed satisfaction with the level of bilateral relations which have been achieved" after a meeting between Foreign Minister Hassan Wirajuda and his Chinese counterpart Yang Jiechi in Jakarta. "In the bilateral meeting, both parties discussed and reviewed the progress of the countries’ bilateral relations, particularly since the signing of the 2005 Declaration," he said. (12 July 2007)


ASEAN telco regulators back deal with China (BusinesWorld, 11 Jul 07)

S'pore 'hopes for China FTA soon' (Straits Times, 11 Jul 07)

Indonesia's cement consumption and the threat from China (Jakarta Post, 11 Jul 07)

Singapore hopes for China FTA soon (Straits Times, 11 July 2007)

ChinaMyanmar can handle its own woes (Reuters, 11 July 2007)

China skilled manpower can boost economy (Brunei Times, 11 July 2007)

Indonesia's cement consumption and the threat from China  (Jakarta Post, 11 July 2007)

RI now behind China in family planning: legislator (Antara, 10 July  2007)

In search of the fading US policy on Asean (Nation, 10 Jul 07)

China keen to learn from Singapore's experience in water technologies (ChannelNewsAsia, 10 July 2007)

Suzhou Industrial Park aims to be BPO hub in China (Channel NewsAsia, 10 July 2007)

Syed Hamid says China visit to deepen scope of bilateral ties (Bernama, 9 Jul 07)

Indonesia and China satisfied with bilateral relations (Jakarta Post, 7 July 2007)

Malaysia wants more investments from China: PM Abdullah (ChannelNewsAsia, 5 July 2007)