Page 80 - IBT August 2021 Issue

Asian Economy Southeast Asia’s Newly Industrialized
Countries (NIC) and China

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