Page 79 - IBT August 2021 Issue

Asian Economy
But unlike other geographical regions,
Southeast Asia has more NICs than others.
One major explanation could be the presence
of China and the influence it exerts over the
nations in its periphery. China began a process
of capitalization in the eighties and the
growth of the regional economic powerhouse
has pulled up new NICs in peripheral
Southeast countries. China’s Belt and Road
Initiative (BRI), along with Chinese premier Xi
Jinping’s 2021 announcement to guide China
towards ‘Moderately Developed Nation’ by
2035 means Southeast Asia’s NICs are looking
for a more intense Chinese involvement in
economic ground.
What is NIC
Popularized in the 1960s and 1970s, the term
NIC referred to Four Asian Tigers: Singapore,
South Korea, Taiwan and Hong Kong.
Basically, a NIC economy is understood as
successfully transitioning from agricultural to
one more dependent on manufacturing and
service industries. Today, India, China, Turkey,
Brazil, Mexico, South Africa, and the During the Covid pandemic, only the
aforementioned four states are grouped under Chinese economy among major
this category. People in NICs enjoy better living
conditions, transport, education and other economies registered positive growth.
facilities than the developing world. NICs are Neighboring Southeast Asians
not developed nations, but on the way to however, was tremendously hit
achieve the status. Some consider Argentina
and Russia to be NICs too.
China and Southeast
Asia’s economy
Under Xi’s leadership, China has stated their
goal to become a highly developed
manufacturing hub by 2035. China, itself a
NIC, aims to reach the developed stage.
Southeast Asia fits well in this plan thanks to
its population, abundant natural resources, a
well established industrial sector along with
powerful Chinese Bamboo networks. New
investments from Asia Infrastructure
Development Bank (AIDB), access to a large
market of approximately 30 percent of the
world population made Southeast Asia a focal
point of China’s next stage development. 76.6
percent of Chinese foreign investments in
2020 have been in Southeast Asia. Much of
this capital has gone to infrastructure projects.
Other sectors of economic involvement are
palm oil, machinery and auto industry,
apparel, pharmaceuticals, electronic products,
mining and timber.
The Major Southeast Asian economies are very
Southeast Asia’s Newly Industrialized
Countries (NIC) and China
well integrated with the Chinese one. Bilateral trade among
ASEAN countries and China in 2019 stood at 641.5 billion
USD. During the ongoing COVID-19 pandemic, only the Chinese
economy among major economies registered positive growth.
Neighboring Southeast Asians however, was tremendously hit.
Tourism literally paused, export of consumer goods and raw
materials diminished, and the crisis of vaccines made the
situation worse. China perfectly used the situation by
providing vaccines in time. Indonesia received 1.3 million
shots, while Philippines received 6 lakh, and Thailand 2 lakh
respectively. Indonesian company Bio Farma even produces
Chinese vaccines at home. However, it will be wrong to assume
Chinese involvement only started with the pandemic. As its
closest neighbor, Southeast Asia’s economy has always been
closely connected with the Chinese one. Since the late 1980s,
China's growth also helped Southeast Asia to rise from a mere
agricultural impoverished nation.
ASEAN-China Free Trade Area (ACFTA) has increased massive
Chinese investment in Southeast Asia’s largest economy:
Indonesia. China is Indonesia’s largest import and export
partner. It is also among the top 3 donors of foreign aid to the
country and is involved in numerous medium to multibillion
access to the Indian Ocean. The Strait of Asia’s billionaires are ethnic Chinese. Chinese communities
Malacca and South China Sea is responsible hold a significant percentage in ownership of companies,
for 1/3 of world’s shipping trade, worth 3 capital stock, banks, conglomerates, foreign money reserves,
trillion USD per year. In a 2003 speech in and businesses in Southeast NICs. These Chinese
Indonesian Parliament, Chinese premier Xi entrepreneurs have extensive ties with their ancestral
Jinping affirmed his promise of a maritime silk mainland. China’s new economic drive certainly aims to use
road, connecting Jakarta, Kuala Lumpur and this business-bureaucratic model for closer integration with
port of Singapore with its booming industry. Southeast states. Much of the Chinese contracts or investment
dollar projects. In 2020 alone, Indonesian exports to China in Southeast Asian countries goes to the companies owned by
amounted to 31.78 billion. Thailand, another major regional The great bamboo ethnic Chinese. China’s new economic drive will strengthen
power, has always held amicable economic relations with China network these local communities in NIC economies.
in recent years. After the 2014 and 2020 clashes among military Since ancient times, especially after the end of
and civil politicians, Thailand has been extremely wary of the Chinese civil war, millions of Chinese Problems of dealing with China
Western states. China meanwhile has invested millions to families fled to Southeast Asian nations. Despite the heavy influence of Chinese capital, many in
develop Thai-China connectivity. Both countries’ trade amounted Chinese community’s percentage is just about Southeast’s NICs are skeptical about China’s involvement.
to an estimated 98 billion USD in the 2020s. Philippines-China 10 percent of the Southeast Asian population. Accusations of bribery, opaque loans, and loan shark tactics
trade relations have been growing at more than 17% percent in In the Philippines, their number is 1.3 million. are not uncommon with the Chinese investment. China has
the 2014-2019 period. Bilateral trade volume amounts to 50 They comprise 3.3% of Indonesian population, been accused of using currency devaluing strategy, often
billion USD. Chinese technologies have boosted Filipino 14% of Thailand population, and 22% of driving native Southeast Asian industries out of the market.
agricultural productions. The archipelago, the Luzon area serves Malaysia’s population. However The Bamboo Some argue that China’s growing influence will make ASEAN
China’s interest to safeguard the busy South China trading route. Network played a vital role in the rise of China powerhouses towards a China centric economy, rendering
Despite occasional strife over small atolls and islands in the as they were the main investors in Xiaoping’s independent economic decision making difficult. The loans
region, Chinese development has certainly brought the Filipino new China. Through a system of small to large with extremely high interest rates pressured the Sri Lankan
economy closer to integration than ever . China is the second family run, clan based business systems, government to give away Hambantota port to China for a long
biggest foreign investor there, trailing Singapore. Chinese communities quickly became the lease. China has quite often tried to pressurize countries like
The 15 member Regional Comprehensive Economic Partnership dominant driving force in the region. Their Pakistan and Myanmar with its port and road projects and to
(RCEP) shows China’s interest to promote an Asia-centric free successes in businesses, fluid capital receive loans. Now, many fears, the growth of Chinese
trade market. All the Southeast Asian NICs joined the RCEP, accumulation and efficient distribution investment, along with a massive flush of Chinese currency to
alongside many pacific and Oceania states. Signed in systems spanning across Eastern Pacific and the hands of Southeast Asia’s Chinese community will make it
November 2020, RCEP has the potential to boost Southeast mainland China made them dominant difficult for ASEAN leadership to choose an independent path
Asian economies. Another Chinese influence in the South stakeholders in the political and economic of economic prosperity.
China Sea and adjacent states is their relentless pursuit of
sectors. More than 80 percent of Southeast
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