China is leading a new wave of regional cooperation in Southeast Asia, and China-driven mechanisms for regional cooperation look set to overwhelm all possible areas of economic and political cooperation.

For economic, security, diplomatic and military reasons, China has been developing stronger relationships with member countries of the Association for Southeast Asian Nations (ASEAN). The Beijing charm offensive has become an integral part of its overall strategy to shape a new regional structure that is more conducive to strategic interests.

A new Asian regionalism stimulated by the China-ASEAN Free Trade Agreement (CAFTA) will dominate the future economic landscape of Asia, in which the United States may not have a substantial role to play. ASEAN members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

CAFTA takes effect for China and six ASEAN countries in 2010 and will be expanded to all ASEAN countries by 2015. China is now laying the bricks of CAFTA's foundations by developing economic corridors in the Greater Mekong Subregion (GMS). This effort will involve water transport along the Upper Lancang/Mekong River covering China, Laos, Myanmar, Thailand, and Vietnam; and rail and road links that will stretch from China's Yunnan province to Chiang Rai in Thailand and so eventually link with Singapore [1].

At the third GMS summit on March 31 in Vientiane, Laos, leaders from Cambodia, China, Laos, Myanmar, Thailand, and Vietnam agreed to endorse the Vientiane Plan of Action for GMS Development for 2008-2012, which emphasizes the significance of pushing substantial and early progress on transport and energy in the subregion.

Since the second GMS summit held at Kunming in 2005, China has provided training and various development projects to GMS members and is taking a leading role in developing the GMS Information Superhighway Network [2].

Since January 2006, China has unilaterally opened 83 trading items to zero tariffs for Cambodia, 91 for Laos, and 87 for Burma. China's continued effort to promote GMS cooperation and play an active role in coordination mechanisms is based on a strategic calculation that emphasizes deepening economic cooperation in the subregion.

Since GMS economic cooperation is a China-ASEAN-Asian Development Bank (ADB) joint effort, China's serious commitment to sub-regional cooperation also reflects the main thrust of its "good neighbor" diplomacy. Based on a comprehensive security strategy that aims to facilitate regional stability through cohesion, China's real intention with China-ASEAN cooperation can be found in its keen effort in pushing GMS integration.

Many analysts believe that as China builds more institutional frameworks for regional economic cooperation, these institutions will accelerate further economic and political interdependence between China and ASEAN countries.

For ASEAN, the immediate effect of the Asian financial crisis in 1997 was a strong desire to accelerate intra-regional cooperation. China's firmness against market pressure of depreciating the yuan was widely seen as having saved China's neighbors from the brink of failure, because depreciation would have further weakened their export competitiveness and had a devastating impact on their economies.

Regional countries would not forget how, in a time of crisis, Western countries imposed harsh requests for domestic reforms and left a negative impression of their conditional assistance to the region and its people. In a broader strategic sense, the growing sophistication of China's foreign policy in the region can be attributed to Beijing capitalizing on this disconnect and emphasizing the country's geographic and historical proximity to the region. This helps it underscore that its aims are unlike those of Western countries, which is to facilitate better relationships with its close neighbors, and consequently create a favorable environment that could be cultivated in China's favor.

Regional integration in East Asia is largely considered driven by the momentum of China's economic rise. It is obvious that the progress of regional integration is very much in line with the pace of China's economic advancement in the region. Economic powers in the region have reacted to China's successful advance. For instance, Japan's comprehensive economic partnership initiative in January 2002 is considered a prompt response to China's free trade agreement (FTA) initiative with ASEAN. India is also accelerating its pace of negotiating FTAs with ASEAN countries.

Dynamic initiatives

The establishment of CAFTA augurs comprehensive cooperation between China and ASEAN countries. It is quite conceivable that once the proposal is initiated, all existing cross-border interactions will become institutionalized under the strategic framework. For this, China has made tremendous efforts in trying to settle its common border disputes. Two additional sub-regional economic initiatives were proposed to deepen cooperation between China and Southeast Asian countries. Those new initiatives came from both national and provincial government levels in China.

Based on the ideas of reinforcing sub-regional cooperation, in 2004 Chinese Premier Wen Jiabao and Vietnamese Prime Minister Phan Van Khai reached a consensus on the new initiative "two corridors and one ring", where areas stretching from Kunming (Yunnan province of China) via Lao Cai to Hanoi, Hai Phong, and Quang Ninh (Vietnam), and from Nanning (Guanxi Zhuang Autonomous Region, GZAR) via Lang So to Hanoi, Hai Phong, and Quang Ninh as two corridors, and along the Beibu Gulf Rim as one ring.

This initiative of economic cooperation, which focuses on developing three different levels of industrial division of labors - first, the Pearl River Delta, electronics, telecommunications, and services; second, Yunan and Guanxi, labor and capital-intensive industries; third, Vietnam, consumer market - linking China's southern provinces of Yunan and Guanxi with Vietnam [3].

In July 2006, on the occasion of the 1st Pan Beibu Gulf Economic Cooperation Forum, the Guangxi government proposed a China-ASEAN M-shape regional economic strategy, which would work on:

1. Extending sea links with Malaysia, Singapore, Indonesia, Brunei, and the Philippines.

2. Constructing a Nanning-Singapore economic corridor through highway and railway projects linking Nanning, Hanoi, Phnom Penh, Bangkok, Kuala Lumpur, and Singapore.

3. Deepening GMS cooperation among all member states and enhancing communication and cooperation between China's southern provinces and Southeast Asian countries.

To take advantage of its geographic location as China's gateway to Southeast Asia, Guanxi has been advocating the combination of maritime economic cooperation, mainland economic cooperation, and Mekong sub-region cooperation. With this ambitious economic strategy in place, Guanxi is moving one step further to try to institutionalize an economic cooperation framework with ASEAN neighbors.

On the strategic level, it will be critical for China's relationship with ASEAN, as the initiative attempts to develop sea links among all countries surrounding the South China Sea, including Vietnam, Malaysia, Singapore, Indonesia, Brunei, and the Philippines, and rail links that will connect Singapore with Kunming.

In the same vein, since 1992, the GMS Program, sponsored by the ADB, has provided various development projects along Lancang River on the China side and the Mekong River along Laos, Thailand, Cambodia and Vietnam. The GMS works

generally on developing regional strategic frameworks through infrastructure linkages, cross-border trade and investment, and upgrading competitiveness of regional countries.

In order to become a prosperous, integrated, and harmonious subregion, GMS member states have adopted a strategy to enhance connectivity, improve competitiveness and promote a sense of community. Their joint efforts have been put forward in nine priority sectors - agriculture, energy, environment, human resource development, investment, telecommunications, tourism, trade and transport - and three priority geographical areas - the

North-South Economic Corridor, a East-West Economic Corridor, and a Southern Economic Corridor.

The entire region understands the implication of China's success in advancing into Southeast Asia and Central Asia by different economic means. It is important to note that China has managed well not only through bilateral economic cooperation but also by initiating or participating in multilateral economic mechanisms.

By the same token, the region has also observed the rapid decline of US influence in all related policy areas. Especially on various joint statements announced by regional countries on occasions of regional multilateral forums, China postures itself with more confidence and a much firmer position in initiating new cooperative proposals and leading the ways of regional cooperation.

In effect, regional economic and political interdependence between China and ASEAN countries is blossoming, though the degree of ASEAN dependence on China is accelerating, especially for those members of GMS. Through various development projects of GMS, China is quickly developing solid connections and networking with its partners.

How substantial is China's influence over its GMS partners? What would be the rationale for China's enthusiasm for sub-regional cooperation? How can one understand the right direction of China's policy intention? The overall policy strategy, which China has taken for the past decade, emphasizes reshaping a peaceful image and helpful attitude of accommodation toward its neighbors. Thus the settlement of border disputes with its neighbors came up as the top priority on Beijing's foreign policy agenda.

On economic cooperation and foreign aid, as China's economy booms, the central government launches "cross-border economic zone" initiatives toward its southern neighbors and encourages provincial governments to utilize all possible resources to deepen interaction and communication with its neighbors.

Currently, all related economic initiatives toward Southeast Asia can be summarized into three general forms: China-ASEAN Free Trade Area on the strategic level, cross-border economic corridors, and the Beibu Gulf Rim economic sphere based on sea transport networking among coastal countries of the South China Sea. In a nutshell, what Chinese sub-regional initiatives have brought forward is paving the way for China-ASEAN cooperation. With such high-profile national investment in facilitating cross-border relations, ASEAN countries have already heightened the degree of dependency upon China's economic and political development.

While many observers are worrying about not paying enough attention to catching up to China's new efforts in the region, they have discovered that the United States does not have much to do apart from existing bilateral security cooperation.

Although China's continuous advance into the region does not necessarily mean that the United States' substantial role has been replaced, experts in the region have commonly concurred that US influence is seriously declining. To say the least, US policy toward Asia is not keeping pace with the new dynamics of regional economic integration that has been spearheaded by China's economic advancement in the region.

What Asian countries need for substantial economic cooperation initiatives does not seem to be reflected in Washington's Asian policy orientation now. In the region's important juncture of historical development, we may begin witnessing a new structure of regional cooperation shaping up in Asia without a strong US presence.

In the past few years, China's policy toward Southeast Asia has noticeably been thriving. The preparation for CAFTA to take effect is progressing steadily. Through several sub-regional economic cooperation mechanisms, the relationship between China and ASEAN is much closer than readily observed. The environmental and social impact of the GMS development projects is, however, creating a backlash in regional communities, and this may serve as a great challenge to China, as demand for the implementation of those projects increases.

The general direction of the Vientiane Plan of Action for GMS Development for 2008-2012 indicates that in addition to accelerating substantial progress of nine sectors, much of GMS resources will be injected to strengthen the institutional framework and mechanism to push cooperation forward.

Meanwhile, China is also very keen on initiating new sub-regional economic cooperation, such as with the "two corridors and one ring" plan. Although the cross-border economic cooperation initiatives mostly benefit the border provinces, it represents China's endeavors to explore economic, diplomatic, and security interests in the region. Based on Beijing's grand strategy, the new sub-regional economic cooperation implies more than its provincial economic development zone. China is trying to utilize its strategic location to extend its influence in economic development for broader market access in Southeast Asia.

The fundamental idea of the Beibu Gulf Rim economic cooperation and the like reflects China's geopolitical and geo-economic deliberation via economic rather than political means. CAFTA opens up bilateral framework for cooperation on the strategic level. The GMS and other sub-regional frameworks facilitate the progress of bilateral cooperation from the grassroots level.

More importantly, the region of the GMS for years has been China's geopolitical constituency. What China expects to gain is through the process of economic cooperation: first, trying to convey a deliberate message to the region that the rise of China will be peaceful; second, bringing about economic development in its southern provinces; and third, making Kunming a regional operations center for trade and transport. In sum, China's active role in the GMS projects its strategic vision of a strengthening relationship with ASEAN.

Notes

1. "GMS Flagship Initiative: North-South Economic Corridor," Asian Development Bank, June 26, 2005.

2. "Country Report on China's Participation in Greater Mekong Subregion Cooperation," National Development And Reform Commission,PRC, Ministry of Foreign Affairs,PRC, Ministry of Finance, PRC, 2008-03-28.

3. "China-Vietnam 'two corridors and one ring" with great potential," Nan Boa Woan, March 22, 2005.

Fu-Kuo Liu, PhD, is a research fellow, Institute of International Relations, National Chengchi University. He was 2006-2007 visiting fellow at the Center for Northeast Asian Policy Studies, the Brookings. His research works focuses on regional security, the United States policy in Asia and regionalism in Asia.

(This article first appeared in The Jamestown Foundation. Used with permission.)

(Copyright 2008 The Jamestown Foundation.)

Courtesy: www.atimes.com, May 16, 2008