The AEC: China looms as the elephant in the room


The AEC: China looms as the elephant in the room

In our last issue we looked at some of the points raised by an article in The Diplomat regarding the start of the AEC, and the on-going problems it faces in terms of creating a genuinely integrated economic powerhouse. In this issue we continue further with some of the points raised in that article.

As The Diplomat piece noted, ‘Given the wide development gaps between countries, combined with the lack of solid and inclusive institutional structures and agencies to govern the newly formed markets under the AEC, Asean as an economic project is likely to emerge as a chain of disparate markets, divided

between fast-growing modern economies (ASEAN-6) and inward-looking poor

countries (Cambodia, Laos, Myanmar and Vietnam, CLMV). The fact that Myanmar’s total trade was worth $23 billion in 2013, compared with Singapore’s $783 billion, underscores the gulf.’

An Asean Civil Society Conference warned of the dangers of unequal and unsustainable economic growth. The consequences could lead to what it claimed were ‘worsening poverty, inequalities of wealth, resources, power and opportunities between countries, between the rich and the poor and between men and women.’

In theory, the leaders of the AEC have attempted to address some of this inequality by trying to narrow the development gaps and, among other things, bolster intra-regional infrastructure as well as reduce the administrative burdens of national regulations on the creation of new businesses and foreign investment. Unfortunately, the realty is that many of these objectives will take a very long time to put into place across the community, unless Asean leaders provide ‘ adequate institutional means and material resources to give the final impetus to economic integration.’

The elephants in the room are China and India. The AEC is looking to ‘position itself as a competitive alternative to the rising economic and military powers of China and India’, a task that will be extremely difficult given the size of both those nations.

‘That said, economic influence goes hand in hand with political influence, and economic integration will be of little significance if it is not backed by sound political reforms, ‘ noted The Diplomat.

Asean leaders have ‘to date remained focused on the integration of its economic pillar. Unfortunately, in the latter realm of political and security integration, there is no shortage of problems. The evolution of the security landscape in the Asia-Pacific region, together with the speed and scale of China’s construction activities in the Spratly Islands, are likely to determine the future path of [Asean].’

As the article notes, ‘In many aspects of ASEAN inter-state relations, it is still Beijing that calls the tune, the latter capitalizing on the grouping’s divides and confusion.’