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China seeks to boost ties with Asean

October 31, 2013

AFTER years of troubled relations with the countries of Southeast Asia, China has launched a campaign to enhance its relationship with Asean through a dramatic increase in trade, all the while not retreating on its sovereignty claims in the South China Sea.

The Chinese leaders proposed that two-way trade between China and Asean, which reached $400 billion in 2012, be raised to $1 trillion by 2020, a substantial advance over the previous target of $500bn in 2015. This new goal was affirmed in a statement after a China-Asean summit in Brunei, which was attended by Premier Li Keqiang.

In addition, the two sides agreed to work towards two-way investment of $150bn in the next eight years.

China is already Asean’s biggest trading partner while Asean is China’s third biggest, after the United States and the European Union.

The Chinese offered Asean economic goodies, which were clearly appreciated.

China proposed an Asian Infrastructure Investment Bank “to give priority support to Asean connectivity projects.” Asean voiced its appreciation of the proposal.

In the joint statement, both sides said that they “look for early and substantive progress in the construction of the Pan-Asia Railway,” which will link the continental countries in Southeast Asia with Yunnan province and will clearly benefit both sides.

Significantly, three of the countries visited by either President Xi Jinping or Premier Li — Vietnam, Malaysia and Brunei — have territorial disputes with China. The only disputant country not visited was the Philippines, whose attempt to seek arbitration has been rejected by China.

The two other countries visited, Indonesia and Thailand, were carefully chosen. Indonesia, visited by President Xi, is the biggest and most influential country within Asean. Thailand, which Premier Li visited, serves as the country coordinator for China-Asean relations.

China’s ties with Indonesia and Malaysia — both visited by President Xi — are being raised to a comprehensive strategic partnership.

The fact that US President Barack Obama cancelled his Asian trip last month accentuated the Chinese presence in the region.

Everywhere that the Chinese leaders travelled, they offered enhanced trading relationships. Thus, when President Xi visited Jakarta, China and Indonesia agreed to achieve $80bn in trade by 2015, compared with $66.2bn last year. And when he visited Malaysia the two countries agreed to aim for $160bn in trade by 2017, compared with $94.8bn last year.

Premier Li, whose Asia trip started on Oct 9, the day after President Xi’s ended, said in an address to the Thai Parliament that Sino-Thai trade will rise to $100bn by the end of 2015, compared to $70bn last year. The premier spoke specifically about what China planned to do to help ease Thailand’s problems. Thus, he promised that in the next five years, “China will import one million tons of rice from Thailand and also import more rubber.”

China is no doubt aware that the Thai government has spent more than $18bn in the last two years to buy rice at artificially high prices to shore up support for farmers, and is now stuck with warehouses full of overpriced rice that it is struggling to sell. Aside from trade deals, Premier Li worked actively to defuse territorial disputes with Vietnam and Brunei.

By arrangement with the China Daily/ANN