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o;center of the world’s manufacturing industry.’
The trend of Asean losing ground to China accelerated after the 1997 crisis. In 2000, FDI in Asean shrank to 10 per cent of all investment in developing Asia, down from 30 per cent in the mid-1990s. The decline continued in the rest of the decade, with the UN World Investment Report attributing the trend partly to ‘increased competition from China’.
Trade has been another, perhaps greater, area of concern. Massive smuggling of goods from China has disrupted practically all Asean economies. For instance, with some 70-80 per cent of shops selling smuggled Chinese shoes, the Vietnamese shoe industry has suffered badly.
Now there are fears that CAFTA will simply legalize smuggling and worsen the already negative effects of Chinese imports on Asean industry and agriculture.
A central part of the plan was to open up Asean markets to Chinese manufactured products. In light of growing popularity of protectionist sentiments in the US and European Union, Southeast Asia, which absorbs only around 8 per cent of China’s exports, is seen as having tremendous potential to absorb more Chinese goods. China’s trade strategy is described by Hu as a ‘half-open model’ that is ‘open or free trade on the export side and protectionism on the import side’.
Worrying trends
Despite brave words from Arroyo and other Asean leaders, it is much less clear how their countries will benefit from the Asean-China relationship.
Certainly, the benefits will not come in labor-intensive manufacturing, where China enjoys an unbeatable edge by the constant downward pressure on wages exerted by migrants from a seemingly inexhaustible rural work force that makes an average of $285 a year. Certainly not in high tech, since even the US and Japan are scared of China’s remarkable ability to move very quickly into high-tech industries even as it consolidates its edge in labor-intensive production.
Will agriculture in Asean be a net beneficiary? China is clearly super-competitive in a vast array of agricultural products, from temperate crops to semi-tropical produce and in agricultural processing.
Moreover, even if under CAFTA, Asean were to gain or retain competitiveness in some areas of manufacturing, agriculture and services, it is highly doubtful that China will depart from what Hu calls its ‘half-open’ model of international trade.
What about raw materials? Yes, of course, Indonesia and Malaysia have oil that is in scarce supply in China; Malaysia does have rubber and tin and the Philippines has palm oil and metals.
But a second look makes one wonder if the relationship with China is not reproducing the old colonial division of labor, whereby low-value-added natural resources and agricultural products were shipped to the centre while the Southeast Asian economies absorbed high-value added manufactures from Europe and the US.
These trends are likely to accelerate under CAFTA, but with a difference: China will beat out the country’s Asean neighbors in achieving control of the domestic market.
To sum up, the trade agreement is likely to disadvantage Asean. Even with the temporary exemptions of certain areas from full trade liberalization, Asean would be locked into a process where the only direction that barriers to super-competitive Chinese industrial and agricultural goods will go is downwards.
Walden Bello is senior analyst at Philippine think-tank Focus on the Global South, TNI fellow and Akbayan representative in the Filipino Congress.
Author of more than 14 books, Bello was awarded the Right Livelihood Award (also known as the Alternative Nobel Prize) in 2003 for "... outstanding efforts in educating civil society about the effects of corporate globalisation, and how alternatives to it can be implemented." Bello has been described by the Economist as the man “who popularised a new term: deglobalisation.”
url：http://www.zcommunications.org/china-s-neo-colonialism-by-walden-bello
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