ASEAN-China Relations: Realities and Prospects

21. ASEAN-China Cooperation for Greater Mekong Sub-Region Development

316 Kao Kim Hourn and Sisowath Doung Chanto 21 ASEAN-China Cooperation for Greater Mekong Sub-Region Development Kao Kim Hourn and Sisowath Doung Chanto BACKGROUND It is fortunate that Southeast Asia is politically stable, enabling an environment conducive for regional cooperation and progress towards regional integration. However, while the spirit of regional cooperation is strengthening, the reality is that political and economic disparities exist among nation states in the region, and in general, institutional weakness continues to retard social progress, development and even social relations. Adding to that, as a consequence, it has been evident that Southeast Asia suffers from a high level of poverty which has worsened after the Asian economic crisis in 1997, the slowdown of Japan’s and the United States’ economies which the region is highly dependent on for export. In addition, it seems that more and more foreign direct investment is going to the region’s largest neighbour, China, due in part to its large consumer market and competitive labour market. Now that the economy of the region is somewhat recovering from the crisis and the political environment is encouraging for regional market development, it is fitting that member countries of the region work together with their neighbours 21 ASEAN-China Relations Ch 21 5/8/05, 9:07 AM 316 ASEAN-China Cooperation for Greater Mekong Sub-Region Development 317 to improve regional competitiveness and reduce dependency on external markets and capitals. This chapter looks at a specific area of cooperation which China could be very influential in promoting the interest of the common good for the region, for example, the ASEAN-China Economic Cooperation for the Greater Mekong Sub-Region (GMS). The central point of this chapter is that developing ASEAN-China relations is necessary for mutual benefit but this cooperative relation should not turn out to be simply that of a core and peripheral relationship. Rather, this cooperative relationship between ASEANChina on GMS economic cooperation should be that of mutual partnership. Naturally, given the economic and political rise of Southeast Asia’s biggest neighbour, the People’s Republic of China, it is only rational that member countries of the region welcome the rapid economic growth of China, its manufacturing and output capacity, technological development and financial power. The hope is that the ASEAN-China Cooperation will be fruitful for the collective good of the region. The rise of China can bring positive changes to the economies of Southeast Asia through trade, investment, and the flow of goods across borders and cooperation in non-traditional security. Politically the interaction between ASEAN member countries and China would strengthen the economic relationship as well as promote greater regional cohesion; therefore, it is logical that the ASEAN-China cooperation is mutually beneficial for the region as well as the citizens in each of the member countries. Conversely, China can take advantage of the region’s resources and market for its exports. In addition to that, given the region’s dire need for foreign direct investment, China does not have to look far for investment destinations. At the Eighth ASEAN-Summit on 3 November 2002, China expressed the intent of economic cooperation through the ASEAN-China Free Trade Area and at the same time indicated a gesture of goodwill for open trade and market development, although its trade with the GMS countries is minimal compared to its global trade. China had made its position clear on the development of the GMS, that is, the GMS is one of its high priorities in the region, with an emphasis on the Initiative for ASEAN Integration (IAI) to bridge development gaps between the newer members of ASEAN with their older ASEAN counterparts, and it is for this reason that China had made many lenient trade agreements with Cambodia, Laos, Myanmar and Vietnam (CLMV) as stated by Vice Foreign Minister Wang Yi.1 However, in light of the cooperative relationship, China is an economy in transition, therefore some economic and structural problems still exist in China, namely the overheating of China’s economy, governance reform issues, environment and health hazards which could very well affect the regional cooperation. 21 ASEAN-China Relations Ch 21 5/8/05, 9:07 AM 317 318 Kao Kim Hourn and Sisowath Doung Chanto PROGRESS OF THE ASEAN-CHINA RELATIONSHIP For the last several years, ASEAN and China had been laying the foundation for the institutional framework for functional cooperation that eventually led...