Publication: China Brief Volume: 5 Issue: 2

The recent ASEAN Summit held in Vientiane, Laos could have broken new ground in Asian integration and community-building, as China is slated to play an accelerated role in building this future East Asian Community. Optimism was thus high for East Asia following the conclusion of the 10th ASEAN Summit, as well as the series of back-to-back summit meetings between ASEAN and its Asian-Pacific partners, China, Japan, South Korea, India, Australia and New Zealand.

In fact, China took center stage with India at this summit, as ASEAN leaders formalized their intentions to bind themselves more closely to these two regional giants so as to ensure their own prosperity and greater global clout. Of particular significance was the speech to ASEAN business leaders of Malaysian Prime Minister Abdullah Badawi, who called for a greater integration of ASEAN with China and India. This was also the first official acknowledgement of Beijing’s and New Delhi’s growing importance to ASEAN at summit level.

ASEAN has in fact completed negotiating last month its goods liberalization package and schedule for the future ASEAN-China Free Trade Agreement (FTA). Both partners should be able to meet its complete FTA schedule by 2010. Prime Minister Wen Jiabao played the graceful guest at the Vientiane Summit and pledged greater cooperation with ASEAN, ranging from energy cooperation to financial matters, after having stated at last year’s ASEAN Summit in Bali that China is a “gentle and friendly elephant” to its smaller Asian neighbors. The goodwill generated by Premier Wen, following the cordial relations and discussions that President Hu Jintao has had with many of the ASEAN leaders at the recent APEC Summit in Chile, paid dividends, as positive feelings toward China amongst ASEAN was prevalent in Vientiane.

New ASEAN Initiatives

But this Vientiane Summit was also significant for Asian integration and regionalism, as ASEAN seems to have taken a new lease on life with six new significant developments, over which China would have key influence in the coming years.

Firstly, ASEAN took a decision to speed up its own economic linkages in setting up an ASEAN Economic Community (AEC). ASEAN leaders signed pacts to push forward economic integration within the grouping, so that the “original” five ASEAN countries (Indonesia, Malaysia, the Philippines, Singapore and Thailand) and Brunei would abolish trade tariffs in 11 sectors by 2007 – three years ahead of schedule. These 11 sectors in fact constitute more than half of current intra-ASEAN trade, which is significant. The other four economies (Vietnam, Cambodia, Laos and Myanmar) will join the trade pact by 2015, or five years earlier than scheduled. The AEC received a much-needed boost in Vientiane and should help foster greater economic community-building across Asia, especially if it is increasingly hinged on a successful ASEAN-China FTA and partnership, which had decidedly given ASEAN an impetus to coalesce as investments shifted to China.

Secondly, the four newer ASEAN members held a sub or pre-summit meeting just before the main summit and pledged to work together to narrow their wealth gap with the other six “older” countries; they also pledged to move quickly towards integrating their four economies so as to better attract foreign investments together. This meeting was significant, as it was the first time that Cambodia, Laos, Myanmar and Vietnam had met at summit level within the greater ASEAN framework. No doubt, China’s increasing influence in these four countries of Indochina has provided this sub-regional impetus to integrate further, which in turn could also enhance Beijing’s overall standing and influence within the “greater” ASEAN in future.

Thirdly, India was officially inducted into the Asian economic integration process. Not only was its growing clout and role recognized (like China), but India’s future place within East Asia appears to have taken a big step forward. In fact, ASEAN is currently negotiating an FTA with India, just as Indian Prime Minister Manmohan Singh declared that two-way trade between India and ASEAN should more than double to US$30 billion by 2007. In this regard, China’s normalization of relations with India has helped pave India’s integration with the region, although China’s trade ties with the East Asian region clearly surpass those with India.

Fourthly, ASEAN also decided to begin FTA negotiations with Japan and South Korea next year, in order to speed up the increasing trade flows between ASEAN and Japan/South Korea, thus giving further impetus to the “ASEAN+3” process. Similarly, Chinese, Japanese and South Korean leaders had also met at summit level in Vientiane to strengthen Northeast Asian cooperation, notably in energy security and resolving the North Korea crisis through the six-party talks. The strengthening of the Northeast Asian pillar in “ASEAN+3” is crucial for the success of any future pan-East Asian regional framework; Beijing’s role is considered key by ASEAN, especially when China’s decision to negotiate a FTA with ASEAN had sparked interests in Japan-ASEAN and South Korea-ASEAN FTAs.

Fifthly, ASEAN invited for the first time Australia and New Zealand to the summit, as ASEAN prepares to begin negotiating FTAs with both Canberra and Wellington next year. This was significant, especially after Prime Minister John Howard of Australia refused to sign the ASEAN Treaty of Amity and Cooperation (TAC), unlike the leaders of China, India, Japan, South Korea, who have all inked the TAC either last or this year. Despite some unhappiness within ASEAN, Australia and New Zealand could still hope to belong to an Asian regional political and economic grouping next year, when it is launched. Beijing’s support for the inclusion of these two Pacific nations would be crucial, as it is believed that Canberra and Wellington could now be actively lobbying Beijing for its blessings and support to join Asia.

Lastly, the concept of a larger Asian economic bloc got a big boost. Philippine President Gloria Macapagal-Arroyo called for ASEAN to push forward with its efforts to integrate the group by 2020 or earlier, and then “embrace China, Japan, South Korea and India”. Such an economic bloc, according to Arroyo, could “hold its own” in future negotiations with the United States, Europe or other emerging economic entities, like in Latin America, the Middle East or Africa.

A crucial decision was taken to organize an East Asian Summit (EAS) in Kuala Lumpur next year, when Malaysia takes over the chairmanship of ASEAN. An ASEAN consensus on this EAS was reached after Indonesia accepted the idea to transform the “ASEAN+3” framework into the EAS, with possible additional countries, like India, Australia and New Zealand, joining in. It is already understood that this inaugural EAS in Malaysia will be followed by a second Summit held in China, thus placing Beijing within the fundamental “core group” of the East Asian integration process, which Japan ardently hopes to co-lead with China, as well as “outsider” India. For Beijing to host the Second East Asian Summit in 2006 would be a regional bonus for China, as it could then affirm the group’s agenda, scope and goals in a more decisive way, after the inaugural 2005 launch in Malaysia.

Balancing the West: India, China and the East Asia Community

The Vientiane Summit has thus clearly advanced the fundamental goal of launching an East Asian entity next November in Kuala Lumpur under Malaysian chairmanship. The much-touted East Asian Summit would then formally replace the “ASEAN+3” framework, thus forging a longer-term Asian economic, social, cultural and political community so as to “balance” the United States, Europe and other emerging entities and groupings in the future.

But even more significant for Beijing would be the future role and place of India in East Asian economic integration. The Second High-Level Conference on Asian Economic Integration was held in Tokyo in mid-November 2004, organized by the Research Information System (RIS) of Non-Aligned Countries, based in New Delhi. The RIS-organized and Japan’s Sasakawa Peace Foundation-sponsored meeting was the second in a series of high-level conferences on Asian integration, which first began in New Delhi last autumn; a third conference is scheduled in Beijing this year, ahead of the EAS launch. Beijing could then be in the center of this Indian initiative, which clearly seeks to secure a place within the future East Asian Community. Significantly, the Chinese partner in this series of Indian-organized conferences is none other than the Development and Research Centre of the State Council of China, an important research organ of the Chinese Government.

In fact, this series of conferences is actively pioneered by the RIS of New Delhi to ensure that India is “on the first train of Asian integration”. India has pledged its full contribution to Asia’s economic cooperation and integration, ranging from energy and financial cooperation to IT and trade, and has insisted on how the tremendous financial assets of Asia (in terms of huge accumulated forex reserves) could be effectively used to enhance Asia’s bargaining power on the world stage vis-à-vis other established or emerging entities.

Regionalism is undoubtedly on the rise across the world and East Asia should not be left out of this global trend. India knows that it would have to obtain the tacit approval and support of Japan, and especially China, to join the future East Asian Community, after having successfully wooed ASEAN and South Korea. In Tokyo, India also signaled the birth of a “new India” and its new mentality of openness and regionalism. To illustrate this new thinking, four young parliamentarians from India’s four biggest political parties attended the conference to underscore India’s new outlook for business, trade, investments and integration.

China’s influence is tremendous in this Indian “opening” and integration. The Indians have insisted that their open economic policy is now irreversible, like China’s, as all political parties fully share this goal. According to them, this should encourage East Asia to embrace India within its future Community, which the Indians have dubbed “JACIK” or “Japan, ASEAN, China, India and Korea” grouping. Clearly, in terms of philosophy and economic modeling, the Indians have stressed their close symbiosis with China, as the two Asian giants leaping forward together. This message was again reiterated at the World Economic Forum held in New Delhi in December. India’s wooing of China will relentlessly continue as it hopes to share China’s strategic view of reuniting East Asia into a future Community, which could “stand up” against and effectively negotiate with the United States and the European Union as equals.

This idea of “JACIK” appears to have also made some progress officially at ASEAN’s Vientiane Summit. Indian Prime Minister Manmohan Singh attended the ASEAN-India Summit and had an invaluable occasion to informally meet his peers from China and Japan. Singh, well reputed for his liberal stance in economic management, again reiterated the crucial importance of East Asian integration to India and vice versa, and thus pitched India’s new thinking to his Asian peers as “an irreversible process”, which should also, according to him, help harness East Asian regionalism. His official visit to Beijing in the coming months would probably be the prime occasion for both Asian giants to pledge their common resolve to build this community, which is what New Delhi seeks in the longer term, as it anchors its own future on consolidated relations with Beijing and an East Asia Community.

But whatever the new geographical and organizational configuration of the future East Asia would be, the EAS framework should remain open and not be exclusive. Pragmatically, it should not be guided by feelings of “Asian nationalism” alone, but instead, seek to better cooperate with the United States and the EU in a global partnership. The Vientiane Summit has decidedly taken the first step forward towards building a 3 billion-strong East Asian Community of the future, and may thus ultimately be remembered for this “monumental Asian leap forward”. But whatever the outcome, China, India and ASEAN will likely continue to play a key role in molding this East Asian Community, as Japan and South Korea appear to be unfortunately relegated to the second tier of Asian integration.

Dr Eric Teo Chu Cheow, a business consultant and strategist based in Singapore, is Council Secretary of the Singapore Institute for International Affairs (SIIA).