Sunday, 6 November 2011

China, a rising Asian giant stirs!

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An Asian giant stirs

BEHIND THE HEADLINES WITH BUNN NAGARA

A forum on working with China’s economy only scratched the surface of all that the re-emerging giant implies.

INFORMED comment on China cannot avoid dwelling on its phenomenal rise: what is evident is also the obvious.

China may still have minimal impact on Africa or Latin America, despite Beijing’s latest global overtures stemming largely from China’s quest for productive resources, energy supplies and markets. But in Central Asia, South Asia, Eurasia, Australasia and North America, it is becoming increasingly difficult to underplay China’s growth, much less ignore it.

In East Asia, China’s rise is impossible to overlook. In this context, the Third World Chinese Economic Forum organised by the Asian Strategy and Leadership Institute (Asli) in Kuala Lumpur during the week was themed “Linking East and West in a Globalised World”.

Where other discussions might underrate the international scope of China’s rise, the forum paid incidental attention to it. So factoids and nuggets of data floated on a sea of information exchange around a rising China.

An Indonesian participant said his country’s lack of infrastructure limited the intake of investment from China, particularly in manufacturing. But he said South-East Asia generally showed it could work with China even in the most sensitive area – finance – so the other sectors should not be so difficult.

A Thai academic offered a “soft launch” of his pet notion of an Asean-China partnership leading the rest of the world in economic recovery and growth. However, no modalities were offered for such a vast and complex project, nor were any likely difficulties cited.

A Singapore-based economist said the region would average 6% growth from next year, helped in part by China’s growth. He expected Malaysia’s GDP per capita to reach US$17,000 (RM52,896) in 10 years (the World Bank cited around US$8,500 or RM26,448 for last year). But another Singapore-based economist under-rated Malaysia’s growth for this year from a projected 5.8% to 4.7% just three days before the forum opened. This economist’s pessimism even found a possible decline to a low of 3.8%, which suggests economists hardly ever agree.

A Singapore delegate said the city state wanted to be the “conduit” for investments between China and the rest of Asia. This presumed an exceedingly close relationship between Singa­pore and China, which is yet to happen; guangxi or mutual comfort levels for steady business deals in China remains important.



Among the original five Asean countries, Malaysia is known to enjoy the highest comfort level with China, contrasting with Singapore and Indonesia. From the Suharto years onwards, Singapore and Indonesia were the last of the five to normalise relations with China, in a move led by Malaysia in 1974.

Yet Singapore has the highest proportion of ethnic Chinese, so it is not a racial issue. Nonetheless, the seeming anomaly continues to perplex analysts and policy advisers everywhere, even in China.

At an earlier conference in Shanghai, it fell on me to try to explain it. I suggested the situation resembled Taiwan’s, and it suddenly clicked: on one level being tied psychologically and strategically to a US military presence in the region, and on another level to sovereign sentiments of an island entity that is a geographical, historical and political offshoot of a mainland on which it still depends.

It was in such a strategic framework that the thrust of this year’s World Chinese Economic Forum implicitly came to be embodied in its final session. The key speaker here was Tun Dr Mahathir, who was credited for doing more to improve Malaysia-China relations than any other Malaysian leader.

He emphasised the promise of vastly growing economic relations with a rising China while rejecting the doomsayers’ fears of any prospective Chinese hegemony.

He said the country’s experience of China over 2,000 years had been a mutually happy and beneficial one, including the times when China was clearly a major world power.

Since China’s role in disputed maritime territory remains visible, Dr Mahathir expressed a preference for peaceful methods of settlement such as negotiations and arbitration. He recounted several cases settled through the World Court, with Malaysia winning the case with Indonesia and then losing it with Singapore.

Inevitably, all disputes need to be settled peacefully, and China and Asean countries seem agreed enough on that. Whatever their differences, it should be evident enough to all that there can be no military solution to political and diplomatic disputes.

An economic forum’s ambit is naturally economic matters, even if that left major political issues under-discussed. These would have to be taken up on other occasions, perhaps by other institutions and participants.

For the rest, there remain numerous areas for fruitful cooperation with China. Among these is renewable energy (RE), where Germany is particularly involved and is already working on with China.

However, some misunderstanding remains across borders. An Australian delegate wanted to know why there was a contradiction between China’s continued use of vast amounts of fossil fuels and its apparent interest in RE.

An explanation of sorts was given, but without touching on the central issue. The fact is that China’s economic growth is so vast and determined, and so dependent on energy consumption, that it cannot afford to choose between different forms of energy.

Growth is more than just economics for China, since it also spells political credibility and social peace. It is anxious that it may continue to need more energy than it can access, so it uses any and every form of energy it can.

As a consequence, it has become the world’s largest producer of solar and wind energy. A Chinese automotive company, BYD, is determined to be the world’s largest producer of electric automobile batteries.

In the process, China is said to be seeking to invest in RE abroad, partly to reap the benefits of new technology for national application. Prospective partners may take a number.