Introduction: Structural Changes, Economic Challenges and Political Accommodation: Managing the Rise of China in Southeast Asia

Abstract

Too often, China-ASEAN relations are seen through the narrow prism of trade. The figures are impressive enough, of course — total trade reached US$202.5 billion in 2007, an increase of nearly 30% over the previous year. Of this, China’s exports to ASEAN comprised US$94.2 billion, while ASEAN exports to China totalled US$108.4 billion (Leese, 2009: 930). The ratification of the China ASEAN Free Trade Agreement in 2002, followed by agreements to reduce tariffs on around 7,000 traded goods in 2005, and services in 2007, is only the latest chapter in a developing regional trade relationship that, however challenging, is proving valuable to both sides. China’s economic growth, previously seen as a threat, is now more often seen as an opportunity by the countries of Southeast Asia. Notwithstanding the impact of the Global Financial Crisis of 2008–10, further strong growth will result from the planned implementation of a zero tariff regime between China and six old ASEAN member countries — Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand — (for most goods) by 2010, and between China and the other four new ASEAN members — Cambodia, Laos, Myanmar and Viet Nam — by 2015. By 2010, the China-ASEAN free trade area will embrace a regional population of 1.8 billion and a combined GDP of two trillion US dollars, making it the third largest market in the world after the European Union and the North American free trade area.

Asia is changing, and China is a principal cause (Shambaugh, 2005)