AEC yet to really make a position on China clear


AEC yet to really make a position on China clear

The Asean Economic Community (AEC) has crawled into its fifth month, and, as has been noted previously, most business people in Thailand would probably be hard-pressed to have noticed much of a difference. Of course, that may not necessarily be the case with those who do most of their business within the AEC region.

The ‘elephant in the room’ for the AEC was, and will probably always be, China. The world’s second-largest economy (largest on some measures) has historically been a major player in the region for centuries. Only now, China really is a global superpower, both in economic and, increasingly, in military terms.

China has spent a lot of money expanding its naval power, with especial emphasis on the South China Sea, the very region where clashes are already taking place with AEC member states Vietnam and the Philippines, as well as Japan and the United States and, peripherally, Malaysia.

The Asean way of conducting business has always been one where constructive engagement is rare, especially when it involves any kind of potential conflict with China. This, of course, bleeds over into the actions, or lack thereof, with the AEC.

The AEC is a business conglomerate, and China is one of its best customers, and no business operator likes to upset a big client.

Laos, which is the current chair of Asean, has yet to show any real leadership in the ongoing dispute in the South China Sea. This is hardly surprising given that Laos is one of the most impoverished states in the world and increasingly is reliant upon Chinese money for its economic development. In 2014 China became Laos’ leading investor, pouring in more than US$5 billion into the land-locked state.

China and Laos have signed an agreement to build a high-speed rail network as part of what the Chinese call a One Belt, One Road project, and this is expected to cost around US$6 billion. Of course, once completed it will only add to the strength of the economic position of the AEC as a whole, while further tying Laos, in particular, to the purse strings of the Chinese.

For some Western analysts, the hope is that the development of the AEC will not happen in a kind of vacuum where regional politics and security are considered separate. There is a belief that the AEC should somehow be the catalyst that helps bring the 10 nations of Asean together as a community with greater interest in projecting itself outwardly and not selfishly. That’s a tall order considering the struggles within the European Union and it’s certainly an unfair burden with which to saddle the AEC so soon after its inauguration.