European Journal of Economic and Financial Research
ISSN: 2501-9430
ISSN-L: 2501-9430
Available on-line at: http://www.oapub.org/soc
10.5281/zenodo.56911
Volume 1│Issue 1│2016
CHINA AND ASIAN ECONOMIC REGIONAL
COOPERATION AND INTEGRATION
Yorgos Pastrakis1, Dimitrios Ioannidis2
1,2
ICBS Business College, Larissa, Greece
email: yorg.past@mail.com
Abstract:
Economic integration in Asia is a distinctive and multifaceted phenomenon because it is
a very heterogeneous area, made up of very different countries in their economic and
political systems, forms of ownership and levels of development; what a huge variety of
ethnic elements, religion and culture adds. It is a geographical space where political
conflicts are also present, historical, some, other more recent regional stability
remaining. China was isolated from the integration processes in the region until 1978.
However, after starting the process of reform and opening up has been inserted into
different schemes gradually. In recent years, the Asian integration has been a peculiar
and complex phenomenon that has been highlighted by great dynamism. The recent
proliferation of agreements in the region is controversial; in particular the Trans-Pacific
Partnership Agreement is controversial because of its potential implications. China's
accession to the integration process becomes relevant because of its growing economic
importance and what this has meant for the countries of the area. This article discusses
integration in Asia-Pacific, provides an overview of the current situation and highlights
the role played by China in its evolution and perspectives. Currently, active
participation impregnates a new dynamism to the links between the countries of the
region.
Keywords: economic cooperation, Asian integration, productive chains, China,
intraregional trade and investment
Introduction
The Asia-Pacific economic integration was a process that started relatively late, because
commercial relations had a multilateral character, although there were strong
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Yorgos Pastrakis, Dimitrios Ioannidis –
CHINA AND ASIAN ECONOMIC REGIONAL COOPERATION AND INTEGRATION
traditional intra-regional trade links, motivated primarily by the geographical
proximity between countries. Efforts to institutionalize the integration-cooperation from
the late sixties and the most significant achievement of this stage were the creation of
the Association of Southeast Asian Nations (ASEAN, for its acronym in English). (1)
This is the main area integration scheme, although its rise was more political than
economic motivations, since its primary purpose was to contain the spread of
communism in the region, particularly China. However, the most characteristic of
Asian integration has been t process with few formal links with few institutions and
legislative mechanisms reason is known as the silent, real or de facto integration. In this
take precedence mechanisms under commitment without agreements that formalize
economic, productive, commercial and financial links, elements that do not make it less
complex, but quite the opposite.
Thus, intra-regional relations are distinguished by their pragmatism, a trait that
has made it possible cooperation between countries with different socio-economic
systems, levels of development, cultures and religions.
De facto integration processes increased in the second half of the eighties and
most active in the late nineties did. During that period other body of great importance
in the region, the Asia-Pacific Economic Cooperation (APEC, for its acronym in English)
was created and also emerged other organizations lesser known sub-regional
cooperation, such as the Association for Regional Cooperation in South Asia (SAARC),
the Economic Council of East Asia (EAEC), the Initiative of the Bay of Bengal for Multi Sectorial Cooperation technical and Economic (BIMSTEC) and the Association for
Regional Cooperation of the Indian Ocean Rim (IOR-ARC).
In addition to the "formal" partnerships, cooperation and complementarity it is
encouraged through numerous "non-formal" specific sub-regional agreements that were
attended nearby border regions or different countries, and formed a natural economic
territory. This has resulted in the establishment of so-called "areas or growth triangles"
with the aim of stimulating trade between neighboring countries. Among these areas
are the Growth Triangle (Singapore, Malaysia, Indonesia), Zone Baht (Thailand, Laos,
Cambodia, Myanmar and Vietnam), the Economic Zone of the Large Area South China
(Hong Kong, Taiwan and the Chinese provinces of Guangdong and Fujian), the
Economic Zone in the Yellow Sea (coastal areas of China, North Korea, South Korea and
Japan), the Economic Zone Japan Sea (coastal areas of northeastern China, the Far East
Russia, North Korea, South Korea and Japan), the Northern Growth Triangle (Thailand,
Malaysia and Indonesia) and the East ASEAN Growth Triangle (Philippines, Indonesia,
Malaysia and Brunei) (Abe, 1997).
Another "non-formal" trade association is what has made China with Taiwan,
Hong Kong and Macao, together with the economic community of ethnic Chinese living
in other Asian countries, known as Ultramar Chinese; this is known as the "Greater
China Economic Area". One of the main features of this type of integration is not by
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CHINA AND ASIAN ECONOMIC REGIONAL COOPERATION AND INTEGRATION
governments or regional institutions but by the coordinators of the business sector has
been driven efforts, although this does not mean that governments have remained
outside the integration process. On the contrary, they have played an active role in
creating the right conditions to facilitate direct investment flows in exporting and
receiving countries conditions through the liberalization of financial systems, the design
of economic incentives, the creation of infrastructure physical, instruction labor and the
establishment of conditions for the trans-nationalization of enterprises (Ramirez,
2000).However, the most significant feature of economic integration in Asia-Pacific is
that has been articulated through the incorporation of companies in the value chains
operating in the region, where production has been the determining factor (Sakakibara
and Yamakawa, 2003).
In recent years, there has been an expansion of integration and economic
cooperation in the region, through further trade liberalization, which has been revealed
in the proliferation of free trade agreements (FTAs) not only within the region but also
in the extra-regional space. This trend has meant greater "formality" in the process. In
this new phase of development of integration, ASEAN has become the most dynamic
scheme within the region. Among its main initiatives are the creation of the FTA
between initial six members and the creation of new intra-regional agreements such as
the ASEAN + 3 and ASEAN + 1.
One of the most important agreements within this association, still under
negotiation, is the ASEAN + 6, so it may mean for the future of integration in the subregion of East and Southeast Asia. The initiative aims to go beyond mere economic
cooperation by establishing a community based on three pillars: economic community,
security and sociocultural, hence also known as Comprehensive Economic Partnership
(CEPEA, for its acronym in English, Comprehensive Economic Partnership of East Asia
or Regional Comprehensive Economic Partnership).
Other existing cooperation agencies have also proposed the creation of LAC
inside. Among them, APEC, SAARC, BIMSTEC and the Pacific Islands Forum (Abe,
1997). FTA, under negotiation since 2012, is the trilateral between Japan, China and
South Korea, three countries account for a fifth of world GDP, but whose relations, so
far, have been permeated by tensions.
In recent years, there has also been a proliferation of bilateral FTAs, some signed
and others under negotiation between the countries of the region or between them and
others from outside the area. Among them, in Asia-Pacific, agreements between
Singapore-Japan, Singapore and South Korea, Thailand-Japan, Thailand and South
Korea, Japan and South Korea, Japan-Taiwan, Singapore, New Zealand and ThailandAustralia ; and outside the area, Japan-Mexico, China-Costa Rica, India-Mercosur, Chile
and Malaysia-South Korea-Chile (Shimizu, 2012).
There are many other proposals, more or less chance of success. Among the most
discussed because of its possible implications for individual countries and for the
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CHINA AND ASIAN ECONOMIC REGIONAL COOPERATION AND INTEGRATION
integration of Asia in general, is the Trans-Pacific Partnership Agreement (TPP, its
acronym in English). This is an FTA, still under negotiation, between eleven countries
so far; however, it aims to become the largest in the world, not only by the number of
member countries -the original signatories left open the door for future adhesions-, but
also for its content. It will cover, in addition to the main pillars of an agreement - access
type to markets, trade in goods and services, liberalization of investment, government
procurement, rules of origin, intellectual property rights, sanitary and phytosanitary
measures, technical barriers to trade , et cetera, other issues, such as competition from
state - owned enterprises, the participation of small and medium enterprises in global
production chains, as well as aspects related to work, developing countries and
regulatory coherence (Falck Lopez and Aceves, 2013).
It should be noted the special interest of the United States in this scheme, not
only economic but also geopolitical. In addition, the explicit aim of expanding their
export potential Asian markets rapidly expanding, has implied, of great importance to
its strategic interests, to increase its "soft" power in the area and the advance of China,
both in the region and internationally.
Another project approach to Asia, this time on the initiative of Latin America is
the Pacific Alliance (Bullón, 2013). This agreement was established in 2011 by Chile,
Peru, Colombia and Mexico, with the primary objective of encouraging Latin American
integration and achieves further growth, development and competitiveness of the
economies involved. To achieve this, we intend to move progressively towards the free
movement of goods, services and capital, and people. The second objective is to expand
trade ties in third countries, especially with the Asia-Pacific area. At present, the
agreement has twenty observers from Latin America and the Caribbean, North
America, Europe, Asia and Oceania.
Several factors come together in the interest of Asia to strengthen their
relationships within and outside the region, among which may be mentioned the
following: the economic development of the region; the presence of new actors,
primarily China with its rapid growth and expansion of its influence in the area; the
slow progress of multilateral trade negotiations within the framework of the World
Trade Organization (WTO); the progress of regionalism in other continents; and the
effects of the economic crisis, in particular the 1997-1998 Asian and global economic
2008.
On the other hand, the results of dynamism in the Asian integration have been,
from the economic point of view, the growth of intraregional trade and investment; and
integration as a process, greater complexity to coexist numerous regional and subregional agreements with varying degrees of integration, function and vision, in which
countries participate simultaneously and are part of a network of relationships known
as "casserole spaghetti "with different and controversial consequences.
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China's participation in the Asian integration
China has been growing at annual average around 10% over the past three decades,
which has become the second largest economy in the world. In international trade, it is
the second largest exporter and importer, from the financial point of view, has the
largest foreign exchange reserves in the world and is one of the leading importers and
exporters of capital. Given the above, it is considered one of the main locomotives of
global growth.
The rise of China is influencing, increasingly, the regional integration
scenario. Since the nineties, and with greater emphasis in the two thousand, the Chinese
government has been developing a successful policy of integration in Asia-Pacific as
embodied by the growing economic linkages with neighboring countries, as well as its
political and its active participation in regional integration performance.
Economically, the country occupies an important position in the production
chains established in the region, which has contributed to the growth of intraregional
trade and investment. In the political arena, China has pursued a strategy of good
neighborliness, which has favored the strengthening of ties between countries in the
area, while has brought peace and security to the region.
From the institutional point of view, China has been actively involved in
integration. The first formal approach was joining APEC in 1991. With experienced
economic development, it has been increasing its presence in the regional environment
in which its support to ASEAN in matters relating to East Asia stands. So far, the Asian
giant has signed twelve agreements and active; negotiation, nine, and proposed six for a
total of twenty seven agreements in the area (Lee, 2013).
This participation has enabled competitive impulses inside and outside the
region. For example, two months after China and ASEAN announced their ACL, other
countries like Japan and South Korea were interested in similar initiatives, and the
United States began to pay more attention to the region (Munakata, 2003).
The integration of China in the Asian region favors both parties. The country
intends to expand its export markets and inserted into regional value chains, while
seeking to develop relationships of trust with other countries in the area to reduce the
negative of those who see it as a threat perception strategic intentions. Also, try to use
the cooperation in the region as a vehicle to promote multi-polarity. Moreover, it can
contribute much to the economic development of this geographic area, by helping its
smaller neighbors and contribute to reducing the dependence of Asian economies in the
market and US financial flows, which are very vulnerable (Munakata, 2003).
The complexity and dynamism that has characterized the Asian integration in
recent years make it difficult to predict their future. Its future development will
influence various internal and external factors that could act as centripetal or centrifugal
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forces, depending on the specific situation at a given time. Among these factors can be
noted as the most important economic and political life of the countries of the region
situation, development of integration in other areas, competition and political rivalry
among regional powers and the position of the United States and China in the regional
scenario. Without underestimating the weight of all the above factors, special attention
should be paid to the last. The future of Asian integration will depend largely on the
position achieved in the area these two key competitors, as it will depend on the
integration focus around ASEAN, particularly in the CEPEA, or TPP. Indeed, an aspect
that arouses interest in the future of integration and the role of China in this is the
position that will take this country against the TPP.
Within the country there are conflicting views regarding the attitude we should
take towards this agreement. Possible options are not incorporated, wait and see how
the agreement or join him. The decision by one or another variant is much discussed
and, ultimately, will depend on the evolution of the project, its internal conditions, their
strategic and that, on balance, the benefits outweigh the cost considerations. So far, the
attitude of the authorities has been waiting, without showing explicit about their
possible interest income, nor absolute rejection.
From the outside, there is also controversy as to the implications for Asian
integration, China's accession to the project. Most experts agree that their exclusion
from the TPP, if finally implemented as it is conceived today, would have negative
consequences for the country, not only because it is a possible advantage for the United
States in a scenario of increasing competition, but also because it would advantages
many signatory countries that are competing with China in third markets. In addition,
China would be damaged not only from the economic point of view by the involvement
of their trade relations, but also in geopolitical terms; for if ASEAN countries and other
US allies decide to support the latter, its influence would be weakened in the region
(Wen, 2012).
However, the rest of the signatories would benefit from the presence of China,
not only from a commercial point of view (for many of them and China is its main
partner) but also political (an approach to the United States constitute a sample will
appease these tensions in the area). They also consider that it could become one of the
most promising members of the group. Others, however, estimate that their inclusion
would weaken the Asian integration.
Either way, the incorporation of China is unlikely in the short term for two
reasons; first, its acceptance must be ratified by all member countries, and secondly,
there are internal obstacles relating to compliance with the required standards and
operation of your model. In this context, China continues to strengthen its position in
the ongoing integration processes, and showing his neighbors who will remain to be a
reliable business partner through the signing of bilateral and multilateral agreements in
the region. In the future, if China does not enter the TPP, hopefully that will strive to
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CHINA AND ASIAN ECONOMIC REGIONAL COOPERATION AND INTEGRATION
develop the mechanism of ASEAN + 6. However, there are reasons to think that will
join the TPP; first, by the negative consequences of not doing so and, secondly, because
the conditions that today this is not likely to be changed. The implications of accession
to this agreement must be studied in greater depth.
Finally and by way of summary, it can be said with some certainty that China
will continue increasing its role in the Asian integration. Ultimately, their performance
in this regard will depend on a set of internal and external factors that will affect its
economic performance, its internal and international financial status, the strength of its
currency and its regional and global presence as well as its geostrategic position In the
area. It is expected that in the short term, the country strengthen its participation in
schemes in which it is involved and, at the same time, stay focused on the expansion of
production lines and services to its less developed neighbors, through the channeling
foreign direct investment.
In the long term, China is expected to have greater leadership in shaping a more
integrated economic system and politically in Asia-Pacific. From the economic point of
view, its role may be more active if it manages the yuan to become the regional
currency, which would facilitate a deepening of financial integration in the area. In this
sense, the internationalization of the yuan is a goal not yet achieved, however, in recent
years there has been significant progress in achieving this goal, with greater use of its
currency in trade and investment, which it has encouraged several countries to preserve
it as a reserve currency.
From the political point of view, leadership depends on the effectiveness of its
foreign policy, especially with regard to the reduction of conflicts in the South China
Sea.
3.
Conclusions
Currently a boom in integration processes and Asian cooperation, either through the
expansion of existing agreements, proposals for the creation of other multilateral spaces
and the proliferation of bilateral trade agreements is observed, both within the region as
with countries outside the area.
The integrator dynamism in the region to several factors, among which stand out
is due: the progress of regionalism in other areas, the slow progress of multilateral trade
negotiations within the framework of the WTO, the effects of the recent economic crisis,
economic performance of the region in recent years and the rapid growth of China,
thereby expanding its influence in the area.
The mechanism of integration more consolidated and dynamic in Asia is the
ASEAN. Among this, with its many expansion initiatives, and the TPP, for its possible
scope, leadership integration in Asia-Pacific in the future will be decided. It will
influence the result of competition between the US and China as key players in the area.
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China plays an active role in regional integration, as evidenced in the growing
established economic ties with neighboring countries, its strategy of good
neighborliness and joining existing agreements. For the future, despite internal and
external challenges facing, it is seen that there are many possibilities to become the
leading country of the regional integration process.
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