HOW HE SEES IT Opportunity knocking for Beijing in Southeast Asia

By DANIEL SNEIDER
KNIGHT RIDDER NEWSPAPERS
As geopolitical battlegrounds go, Southeast Asia doesn't rank very high on the Bush administration's agenda. The Pentagon sends generals and admirals now and again to talk about hunting Islamic terrorists or protecting sea lanes. But otherwise the region doesn't rate more than a passing visit on the way to somewhere else.
The Chinese, however, are eager to rush in where Americans are too lazy, or too preoccupied, to tread. They see great opportunity in this 10-nation region, home to more than a half-billion people with a collective economy worth more than $750 billion.
That's why the Chinese premier came recently to the summit of the Association of Southeast Asian Nations -- or ASEAN -- to ink a trade pact that will eventually create a single market uniting a quarter of the world's population.
The deal was negotiated in just two years, practically light speed for a group that is known for getting very little done. Now other countries in Asia -- Japan and South Korea, along with India -- are rushing to negotiate their own trade deals with ASEAN. The organization itself is planning to hold an East Asia summit next year.
"We cannot rely on the West alone," Philippines President Gloria Macapagal Arroyo told a business gathering before the summit. "An enlarged East Asia bloc can not only secure the future of ASEAN, but also the future of China, Japan and South Korea."
This is music to Chinese ears -- although they would be happier if rival Japan were not among the inner circle. Chinese Premier Wen Jiabao sketched his own vision of an East Asian economic community in his speech to the summit meeting.
The creation of the free trade zone is "part of a Chinese strategic plan to project its influence in Asia, to outflank Japan and match the presence of the United States," commented Singapore's Straits Times. "But who minds?"
Competitive pressure
Not everyone in Southeast Asia welcomes China's advance. They feel the competitive pressure from there and from Asia's other rising economy, India. In a speech at the meeting, newly elected Indonesian President Susilo Bambang Yudhoyono called for ASEAN to deepen its own integration as a single market. "Why," he asked. "Two words: India and China."
But the reality is that China is already the region's engine. ASEAN trade with China is booming -- its exports are up 40 percent this year alone. Two-way trade will reach $100 billion by year's end, closing in on the U.S. and Japan. And for now, ASEAN runs a healthy surplus in its exchange with China, which buys up raw materials from the region to feed its hungry factories.
China stimulates growth "better than the U.S. is currently able to," the Straits Times noted. "Conversely, some member nations have reservations about excessive American reach."
Japanese interest in the region waned with its economic downturn in the 1990s. And Tokyo unwisely followed the American lead in pursuing bilateral trade deals, trying to use their leverage one on one to get advantageous deals.
Political influence
While Japan dithered, China moved ahead, observes Oriental Economist editor Richard Katz, an Asian economic expert. "And, to the degree that political influence follows economic influence, China's trajectory of overshadowing Japan in Asia trade is a key development."
The actual terms of the China-ASEAN pact are less impressive than the rhetoric. It lowers tariffs on goods they trade by 2010 but it excludes thousands of "sensitive goods," many of them major items such as autos, steel and sugar.
It is easy to dismiss talk of an East Asian community as fanciful. But events are moving faster than anyone imagined.
X Daniel Sneider is foreign affairs columnist for the San Jose Mercury News. Distributed by Knight Ridder/Tribune Information Services.