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Thursday, June 10, 2004

China woos influence with softer style

HONG KONG -- Publicly, American officials such as Secretary of State Colin Powell are saying that relations with China are the best they have ever been. Privately, however, policymakers are not shy about admitting that the two countries are engaged in a diplomatic contest in many arenas, most notably in Southeast Asia.

While China may not deliberately wish to replace the United States as the dominant power in the region, its emergence as an economic powerhouse inevitably forces its neighbors in Southeast Asia to sit up and take notice. Some Southeast Asians still see China as a rival for foreign domestic investment and overseas markets, and wish to see a stronger American presence as a counterweight. Many others now see China's rise as offering new opportunities as Beijing imports raw materials from Southeast Asia and as Chinese businesses make investments there.

China and the U.S. are not the only countries making overtures to Southeast Asia. Japan, South Korea and India are all courting the region. However, China is clearly ahead in the race. Beijing and the 10-member Association of Southeast Asian Nations have agreed to set up the world's largest free-trade area by 2010, one that will comprise almost 2 billion people with a total gross domestic product of almost $3 trillion.

Last October, China also became the first country outside the region to sign ASEAN's Treaty of Amity and Cooperation, a sign of a stronger political bond between the two.

China's trade with ASEAN hit a record high of $78.25 billion in 2003, up 42.8 percent from 2002. But it is still behind the $120 billion logged by the U.S. However, Premier Wen Jiabao has suggested that in two years China could catch up with or surpass American trade with the region.

James Kelly, U.S. assistant secretary of state for East Asia, sounded a warning earlier this month when he appeared before the House International Relations Committee. "China is challenging the status quo aggressively," he said. "It is expanding its influence in Southeast Asia by enhancing its diplomatic representation, increasing foreign assistance and signing new bilateral and regional agreements."

Kelly pointed out that a recent exchange of senior official visitors between China and Cambodia "resulted in 25 bilateral agreements," ranging from "agreements to conduct feasibility studies for a hydropower plant to grant and loan agreements covering textiles and cement plants, tourism, highway construction and the development of a golf club." While they don't add up to much in financial terms, Kelly said, "they serve notice of how China is using its newly won economic power to expand its presence and political influence among its southern neighbors."

By contrast, the U.S. diplomatic effort in the region is hobbled by the country's self-assigned role of champion of human rights. Thus, the U.S. maintains a harsh sanctions regime against Myanmar, a member of ASEAN, and that alone makes it impossible for the U.S. to offer ASEAN a free-trade agreement. Instead, the U.S. has offered member countries of ASEAN bilateral FTAs. So far, only one has been negotiated, with Singapore. Talks are now going on with Thailand. Malaysia may be next.

Southeast Asia has long been an arena for contention between the U.S. and China. In fact, the U.S. became involved in Southeast Asia largely because of China, when Washington fought the Vietnam War in an effort to prevent the spread of Asian communism with its headquarters perceived as being in Beijing.

"The U.S. presses Southeast Asia on human rights and opposed [General] Wiranto as a presidential candidate in Indonesia," professor Kenton Clymer, an expert on Southeast Asia, said at a recent talk at the Center for Asian Studies at the University of Hong Kong. "The U.S. is heavy-handed, emphasizing such things as security, the war on terror and military cooperation" said the professor, who is currently teaching at Renmin University in Beijing

"China doesn't lecture Southeast Asia on democracy, human rights or deregulation," he said. As a result, the region is wooed more successfully by China. The Chinese, in fact, "have bilateral agreements with all Southeast Asian countries. They forgive debts and give soft loans," creating quite a different image from that of the U.S. in the minds of Southeast Asians.

The U.S., he said, needs to change its approach to Southeast Asia if it is to have greater success. But at a time when the U.S. still feels vulnerable to terrorism, it is probably unlikely that Washington will shift its priorities and change its message to Southeast Asia.

Frank Ching is a Hong Kong-based journalist and commentator.

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